When goods are exchanged across international borders, they are liable for a government-import clearance called a customs duty or custom clearance charges. The import and export of goods can impose multiple import clearance and export clearances, along with several other charges. These custom freight duties and charges must be considered as when combined they can impact your total shipping charges. Therefore, it is very important for importers and exporters to completely dive into the concept of customs duties applied to their goods and know how to work on customs solution(s).
In this write-up, you will gain insights into customs clearance services with cutting-edge customs technology so that you can plan strategically how to import goods into India. This will help you to get an idea of customs clearance in India, its customs duties, taxes, and other charges that are imposed by the Indian government.
Custom/Import duty in India
In India, all customs duties are headed by the Customs Act (1962) and the Finance Act. Its duty cost or tariff generally depends on the product and on specific factors like where the product is manufactured, and prepared and the material used while its preparation. The collection of these charges falls under the Central Board of Indirect Taxes and Customs (CBIC). Any modification or amendment in customs duty rates is announced in the annual Budget, which is usually proposed on the first day of February, or circulated via notifications in the Gazette of India. Primarily, India has implemented and imposed import or customs duties to
a) Oversee the local economy
b) Gain government earnings
c) Scrutinize the shipping of goods crossing its frontiers.
Types of import duties in India
- Basic Customs Duty (BCD)
- Countervailing Duty (CVD)
- Anti-dumping Duty (ADD)
- National Calamity Contingent Duty (NCCD)
- Agriculture Infrastructure and Development Cess (AIDC)
- Social Welfare Surcharge (SWS)
- Safeguard Duty
- Protective Duty
Other import-related Costs
- Integrated Goods and Services Tax (IGST)
- Compensation Cess
- Customs Handling Fee
How to calculate import duty?
The calculation of import duty involves estimating a percentage of the assessable worth of the imported goods. If the products are imported considering the Cost, Insurance, and Freight (CIF) Incoterm, then assessable value totals CIF plus customs handling fee (of one percent). To obtain the CIF value, just add the cost or invoice value of the items together with the insurance and freight prices.
Process of paying import duty in India
As soon as Indian customs waves the green flag on imported goods, you can make an online payment on Icegate, (the Indian Customs’ electronic data interchange platform). To pay custom duty you can simply follow these steps:
- Visit Icegate portal
- Enter your Import/Export Code or use your Icegate credentials
- Press on the e-payment option
- Your unpaid e-challans or electronic payment demands will display
- Opt for the challan that has to be paid
- Pick your bank and payment Mode
- You will be redirected to the bank’s payment gateway
- Do the payment
- Once payment is done, you will be redirected to Icegate
- In the end, you can take a print of your payment receipt
A few factors affecting import duty
There are several aspects to consider while calculating import duty:
- Harmonized System (HS Code)
- Free Trade Agreements (FTAs)
- Rules of Origin
What is a Duty exemption?
The Duty Exemption enables the duty-free import of goods essential for export production.
India has various duty exemption schemes that permit the duty-free import of raw materials for export. These schemes are not only levied to raw materials or items but also fuel and packaging materials utilized in the process of production. The primary goal of these duty exemption policies is to help Indian export brokers in promoting Indian export services through custom clearance documents and export international shipping documents. Therefore, they are also defined as export promotion schemes.
The duty exemption plan allows one to do so through an advanced license. The duty exemption/ Remission schemes ensure the duty-free import of goods for export production, together with replenishment of the same. The schemes include:
(a) Duty Exemption Schemes, (b)Duty Remission Scheme, ©Scheme for Rebate on State and Central Taxes and Levies (RoSCTL), as notified by the Ministry of Textiles
