Indirect Taxes

TYPES OF DUTIES

The Customs Tariff Act, 1975 (hereinafter referred to as the ‘Customs Tariff Act’) specifies the rate of customs duty. Various types of customs duties are:

Type of Duty

Applicability

Basic Customs Duty (BCD)

Applicable on all imports except for exempted goods

Integrated Goods and Services tax (IGST)4

This duty is levied to countervail the effect of GST in India and is leviable at the rate as per the provisions of IGST Act, 2017 on supply of like article in India, on the value of imported article as determined under Section 3 (8) or 3 (8A) of the Customs Tariff Act, 1975

Note: Not necessary that goods exempted from BCD would automatically be exempted from IGST, as BCD is levied by virtue of Section 12 of Customs Act, 1962 whereas IGST is levied as per Section 3(7) of the Customs Tariff Act, 1975

Goods and Services Tax (GST) Compensation Cess 5

This duty is levied to countervail the effect of GST Compensation Cess Act, 2017 in India and is leviable at the rate as per the provisions of GST (Compensation to States) Cess Act, 2017 on supply of like article in India, on the value of imported article as determined under Section 3 (10) or 3 (10A) of the Customs Tariff Act, 1975

Protective 6 / Safeguard Duty7 / Countervailing duty and Antidumping Duty 8

These duties are imposed to protect the interest of domestic industries established in India

Social Welfare Surcharge (SWS) 9

With an object to provide and finance education, health and social security, SWS is levied @ 10% on import of goods (on the goods specified in the First Schedule to the Customs Tariff Act, 1975) except specified goods which are granted exemption from SWS

Health Cess

Finance Act 2020 has introduced levy of Health Cess at the rate 5% on value of imported goods specified in the Fourth Schedule. These goods mainly include medical equipments.

With effect from 01 July, 2017, post implementation of GST, Countervailing duty10 (CVD) and Special Additional Customs Duty11 (SAD) have ceased to exist on the imported goods other than those on which central excise duty/VAT continues to be levied in GST regime.

A Cess named as Road and Infrastructure Cess12 (as Additional Duty of Customs) is charged at ₹ 9/- per litre13 on Petrol and HSD Oil for financing infrastructure projects.

Though the concept of various duties is explained above, for ease of understanding, structure of customs duties on imports in India is provided through one example below:

Particulars

Amount in ₹

Cost of imported goods

A

100.00

Add: Basic Customs Duty (Assumed @ 7.5%) (7.5% on A)

B

7.50

(A+B)

C

107.50

Add: Social Welfare Surcharge14 @ 10% (10%*B)

D

0.75

(C+D)

E

108.25

Add: IGST (Assumed @ 18%) (18%*E)

F

19.49

(E+F)

G

127.74

Add: GST Compensation Cess (Assumed @ 15%) (15% on E) (D)

H

16.24

Total cost of imported goods (G+H)

143.98

Effective Customs Duty (B + D + F + H)

43.98

Note: Please note that IGST and GST compensation cess would be available as input tax credit under GST Laws subject to fulfilment of prescribed conditions