Customs duty refers to a tax imposed by the government on goods that are imported or exported across international borders. It is a form of indirect tax collected by the customs authorities of a country. Customs duty serves multiple purposes, including revenue generation, protection of domestic industries, regulation of trade, and control of illegal activities.
In India, customs duty is levied under the Customs Act, 1962, and is administered by the Central Board of Indirect Taxes and Customs (CBIC). The nature and types of customs duty in India include:
1. Basic Customs Duty: It is the most common type of customs duty and is imposed on imported goods based on their classification under the Customs Tariff Act. The rates of basic customs duty vary depending on the type of goods and are expressed as a percentage of the assessable value.
2. Additional Customs Duty (Countervailing Duty or CVD): This duty is levied on imported goods to counterbalance the excise duty imposed on similar goods produced domestically. It aims to ensure a level playing field for domestic manufacturers.
3. Special Additional Duty (SAD): SAD is applicable on imported goods and is charged at a specific percentage (currently 4%) on the assessable value. It is levied in addition to basic customs duty and countervailing duty and is non-creditable.
4. Anti-Dumping Duty (ADD): This duty is imposed to protect domestic industries from unfair competition caused by the dumping of goods at a price lower than their normal value. Anti-dumping duty is imposed on specific imported products found to be dumped in the Indian market.
5. Safeguard Duty: Safeguard duty is levied on imported goods to protect domestic industries from a sudden surge in imports that could cause serious injury. It is temporary in nature and is imposed as a measure to stabilize and safeguard domestic industries.
6. Preferential Duty: Under trade agreements or arrangements with specific countries or groups of countries, preferential duty rates are granted to encourage trade and provide benefits to partner nations. These duty rates are lower than the normal rates applicable to non-preferential imports.
These are some of the main types of customs duty in India. The rates and applicability of customs duty can vary based on government policies, international trade agreements, and specific goods being imported or exported.