In India, the indirect taxes that the Indian government levied on all imported and exported products and services are known as custom duty. The tax that is mainly levied on imported goods and services within India is called Import Custom Duty. The Indian government charges these taxes to raise funds as revenue to provide an equal level of competition to the domestic company establishments from other countries. For the past couple of years, the government has changes the system to collect indirect taxes and introduced (GST) goods and services tax which is applicable from 1 July 2017.
Earlier before GST many taxes like state tax, central excise, service tax, value-added tax, etc. We’re added on the good that for imported to India but now all these taxes are replaced by just one tax i.e GST. GST is divided into three categories: – Central Goods and Services Tax, States Goods and Services Tax, and IGST Integrated Goods and Services Tax also known as CGST, SGST, and IGST. Both CGST and SGST are for intra-state transactions but IGST is imposed on all the imported products in India. In India there are five slabs of IGST is available i.e 0%, 5%, 12%, 18% and 28%.
Calculation of Custom Duty India The valuation for the import customs duty in India is governed by the Customs Act of 1962. India’s tax rates system is based on the Harmonized System of Nomenclature (HSN) of the Customs Co-operation Council. The rate of customs duty depends upon the HSN Codes of the products. For calculating rates of import duty we have four variable values that are as follows:-
1. IGST:- In India import custom duty is collected in the form of IGST. Indian government levy IGST on the goods and services whether available at low cost or high cost like jewelry stones etc, IGST charge is calculated as the value of goods imported to India + any customs duty chargeable on the goods.
Value on which IGST is based= price of Goods imported + any chargeable Customs Duty + Social Welfare Surcharge
IGST Payable= Value on which IGST calculated * IGST current Rate for the product
2:- Basic Customs Duty (BCD):- This duty is calculated on the value of the goods and services that have landed at the customs border of India. Its range varies from 0% to 100%. Its value also depends upon the HSN code of the product and the Country in which the product is delivered. Also, the Ministry of finance revises its rate from time to time.
3:- GST Compensation Cess
GST Compensation Cess is imposed as an additional cess on GST on imported items as well as on domestic item that is being manufactured in India. The imported items on which cess is charged are mostly levied on goods belonging to the luxury and demerit category.
4:- Social Welfare Surcharge:- This welfare charge is the tax imposed ON CD value along with the value of goods and services. It is generally 10% of the value of goods or this surcharge is exempted from the tax.
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