Everything about Indian Custom Duty

Customs duty is the direct tax on merchandise moving across international boundaries; it essentially refers to the fee paid on merchandise being imported and exported. The Indian government uses the customs duty to increase domestic revenue, control the movement of products, and defend indigenous businesses. Depending on where the items are made and what they are made of, the cost of customs duty varies. Additionally, it is dependent on the cost of the commodities or their size and weight. Ad Valorem Duties are the name for customs fees that are calculated depending on the value of the goods. The term “Specific Duties” is used to describe customs fees that are calculated based on quantity and weight. The Customs Act (1962), which is governed by the Central Board of Excise and Customs (CBEC), governs custom duty in India.

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Estimate of Government Customs Revenue in the Budget

2020 – 2021

Rs 1,38,000 crore

2019 – 2020

Rs 1,25,000 crore

2018 – 2019

Rs 1,17,812 crore

What Does India’s Customs Duty Mean?

The Customs Act governs Indian Custom Duty (1962). The government imposes tariffs under this law on both imported and exported goods. Before admitting items into the country, they also have certain procedures, penalties, and limitations. The Central Board of Excise and Customs (CBEC) are responsible for the Customs Duty. The Ministry of Finance’s Department of Revenue includes the CBEC as a subordinate department. Policy-making for the collection and imposition of customs duties is supported by the Central Board of Excise and Customs. Smuggling prevention and custom duty evasion are included in the custom duty services. The tax administration of domestic and international travel is examined by the ministry of custom duty.  It is divided into various sections, including the Central Revenues Laboratory and Directorates and the Commissioner ate of Customs.

Objective of Custom Duty

  • The protection of the economy, employment, citizens, and environment of the nation is the primary objective of customs duty. The ease with which things can move within and outside of the country makes this possible.
  • Each good that enters the nation is subject to a certain rate of duty. It is determined by a number of factors, including how it was made and where it was produced. It gives a very clear indication of how the government taxes its international partners.
  • Additionally, the customs duty supports domestic business, raises income, and reduces imports of non-essential goods while promoting sustainable energy.
  • Customs taxes mostly fund domestic production.

Varieties of Custom Duty

All items imported domestically are subject to custom duty. The Second Schedule-listed commodities are subject to export duties. There are no import taxes on fertilizers, food grains, or life-saving medications. Following categories apply to custom duty:

Fundamental Customs Duty

A set % of the value of the products is subject to the Basic Customs Duty. Based on the ad-valorem, it is repaired. The Customs Tariff Act now governs the Basic Customs Duty (1975). Specific commodities may be tax-exempted by the central government.

Retaliatory Duty

CVD, or countervailing duty, is another name for additional customs duty. In accordance with Section 3 of the Customs Tariff Act, it is levied on imported products. The Central Excise Duty and the Regulatory Duty are comparable

An Education Tax

A 2% increase in the Education Cess is added to an additional 1 % of the total customs charges.

Defending Duty

Protecting home industry against import rates authorized by the Tariff Commissioner is the purpose of the protective duty.

Protective Duty

The increase in exports is shielded by the safeguard duty. If the government believes that a rise in exports could harm the existing domestic industry, the duty may be imposed.

Duties against Dumping

When imported goods are priced below the fair market value, the anti-dumping duty is applied. Based on the dumping margin, the anti-dumping duty is calculated. It refers to the price differential between the ordinary price and the export price.

Online Custom Duty

The Indian Customs Electronic Commerce or Electronic Data Interchange (EC or EDI) Gateway, often known as ICEGATE, is the online customs duty site. It offers an electronic filing service to the Customs Department’s customers. The portal provides trade and transport carriers, also referred to as Trading Partners, among other services. The entrance and shipping bills can be electronically file using ICEGATE. Email, FTP, and web upload are additional ways to access communications between trade agreements and customs. With their manifests, the shipping and airline companies are help by the ICEGATE portal. For information on cargo and logistics, the guardians and cargo logistics can communicate with Customs EDI. In addition to e-filing, the ICEGATE portal also enables document tracking, e-payment, online IPR registration, code status, and license verification. The customer service team responds to the concerns and questions of business partners.

Payment of Custom Duty

  • Open the ICEGATE e-payment site and log in.
  • To log in, enter the import or export code or key in the login fields.
  • The e-payment button must be click.
  • You can see every e-challan that has your name on it.
  • Can decide which challan you want to pay.
  • You will be taken to the payment portal after selecting a payment option.
  • After making the payment, you will be taken to the ICEGATE portal.
  • Select the print option.
  • Keep a copy of the payment.

Rates of Custom Duty

There are two types of custom duty rates: specified and ad valorem. The range of the customs duty is 0% to 150%. 11.90% on average is the rate. Additionally, you can consult the list of items free from customs duty.  

Customs Fees


Landing Charge (LC)

1% CIF

Countervailing Duty (CVD)

0%, 6%, 12% (CIFD + LC)

CEX: Education and Higher Education Cess

3 % CVD

CESS: Education + Higher Education

3% (Duty + CEX (Education and Higher Education Cess) + CVD)

Additional CVD

4 % (CIFD + LC + CVD + CESS + CEX)

Calculator for custom duty

  • The Custom Charge Calculator is a straightforward tool for figuring out the required customs duty.
  • On the ICEGATE portal, there is a calculator provided.
  • The CTH or HS code of the items you intend to import must be enter. You can access the ICEGATE portal by doing that.
  • Enter up to 30 characters in your description.
  • Select the nation of origin. It could be for favorable or anti-dumping duties.
  • To display the list of items, click the Search tab.
  • You can view a list that corresponds to your requirements.
  • Choose the best option.
  • You have access to a chart that is fill with the necessary data.
  • Enter the data to determine the precise customs duty you must pay using the dynamic chart.
  • Based on particular or ad valorem calculations, customs duties are assess.
  • Rule 3(i) of the Customs Valuation Rules establishes the value of the commodities for the ad valorem category (2007).

Calculating Customs Duty

According to either the Specific or Ad Valorem technique, the custom duty is compute. By figuring out the value of the commodities, the calculation is complete. The Customs Value (Determination of Value of Imported Goods) Rules, 2007, establish both the specified and ad valorem values. The Customs Valuation Rules Rule 3 determines the good’s ad valorem value (i). Let’s assume that the elements that affect appraisal have no quantifiable data.

If there are no quantifiable data on the valuation elements, the goods are value using a hierarchy system.

The list is as follows:

Method of Comparative Value

The Comparative Value Method contrasts the transaction values of goods that have a common characteristic (Rule 4).

Method of Comparative Value

The Comparative Value Method contrasts the transaction values of goods that have a common characteristic (Rule 5).

Method of Deductive Value

The Deductive Value Method uses the item’s selling price in the country of import (Rule 7).

Method of Comparative Value

The country of production’s profit and fabrication-relate expenses are use in the Comparative Value Method (Rule 8).

Fallback Approach

The early approaches, which offer a large degree of flexibility, are the foundation of the fallback method (Rule 9).

Describe eSanchit

Electronic Storage and Computerize Handling of Indirect Tax Documents is refer to as eSanchit. The Central Board of Indirect Taxes and Customs highlight eSanchit (CBIC). It is a technique for digitizing the Indian Tax System. By assisting with online customs-relate documentation, Sanchi facilitates border trading. The supporting documents can be upload, and the procedure is simple. It does away with the requirement that officers receive documents in hard copy. It appears to be a service that has been optimize and minimize.

The eSanchit service is accessible to registered ICEGATE users (Indian importers and exporters). The official eSanchit portal can be access via the ICEGATE website. The Electronic Commerce Data Interchange Gateway for Indian Customs and Central Excise is known as ICEGATE. Customers of the Customs and Central Excise Department can use its e-filling services. The Participating Government Agencies can use the eSanchit service through the Central Board of Indirect Taxes & Customs. By uploading papers online, it gives importers and exporters the necessary clearance in the certificate format.






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