Custom Duty

Definition: Customs duty is a tax imposed on the import and export of goods. It is an indirect tax. While revenue is the most important factor, the duty may be levied to protect domestic industry from foreign competitors.

Note: Customs Duty is now replaced by IGST. It is applicable to the import and export of all goods and services.

According to The Integrated Goods and Service Tax Act, 2017, import means

• Bringing goods from a place outside India
• The supplier of service is outside India, the recipient of service is in India and the place of supply of service is in India.

Some Latest Basic Customs Duty Rates

Duties applicable after the introduction of GST

Types of Custom Duty

• Basic Customs Duty
• IGST
• Education Cess
• Anti-dumping duty
• Safeguard duty

Exemption

The government may decide the goods and services for which the tax will be exempt as necessary in the public interest.

Rates

A simple formula for calculation is

GST Amount = (Original cost *GST%)/100

Net Price = Original cost + GST amount

Calculation of Duty

It is calculated on the value of imported goods and any customs duty chargeable on the goods.Therefore, IGST value must be derived after adding the applicable customs duty to the value of imported goods.

Assessable value of an imported item is Rs 10000
Basic Customs Duty = 10%
Integrated Tax Rate = 18%

The taxes will be calculated as follows:
Assessable Value = Rs.10000/-
Basic Customs Duty = Rs.1000/-
The value to impose integrated tax = Rs.10000 + Rs.1000 = Rs.11000/-
Integrated tax = 18% of Rs.11000 = Rs.1980/-
Sum of Taxes = Rs.1000 + Rs.1980 = Rs.2980/-

Input Tax Credit

Under the GST system of taxation, the registered importer makes use of IGST levied on them as an input tax credit. The importer can make use of Input Tax Credit to make payment of taxes towards the outward supply of goods. The basic customs duty will not be availed in the Input Tax Credit.

Payment of Custom Duty

• Login to the payment portal of ICEGATE
• Enter the key login credentials by ICEGATE
• Click and view all the challans
• Select and pay the challan. You will be redirected to the portal.
• Click on the payment button and save your copy.

e - Sanchit

For effortless business practices, CBIC has launched e-Sanchit which helps the registered taxpayer to file their documents online. It is compulsory from 15th March. Registered users on ICEGATE can use the e-Sanchit gateway. Under this new scheme, there is no requirement for producing hard copies to the Assessing Officers. This eases the documentation process and also speeds up the process of clearance.

Changes made in the Union Budget 2022

• About 350 exemptions are withdrawn for payment of Customs Duty. After a detailed view 40 exemptions are to be phased out with respect to capital goods and project imports.
• Certain exemptions are being introduced for duty-free import of specified goods by the bonafide exporter of items like handicraft, apparel, leather goods. The value-added export goods shall be exported in 6 months and the exporter shall follow IGCR Rules.
• The custom Tariff structure is being simplified. In this process, the Tariff rates and lines have also been rationalized
• Revised IGCR rules to make the process digital and transparent.

Import of Services under IGST

The import services as per GST Act 2017 are the supply of service by a service provider who belongs outside India but receives services from India. The place where services are being given is also within India. As per the provision mentioned under Section 7(1), (b) of Central state goods and services Act, 2017, only those importing services are being considered if those services are given in the course or continuance of the business.

Under GST, the import of goods and services will be considered supplies which are done inter-state. A person who is importing goods and services will be liable to pay tax on a reverse charge basis.

However, in case of importing all online information and database access or retrieval services (OIDAR) by unregistered, non-taxable recipients or suppliers based out of India they will be liable to make payment of taxes. The supplier either will have to take registration or assign a person in India for making the payment of taxes. The supply of goods and services to a Special Economic Zone (SEZ) developer or unit will be considered as inter-state supply. Such goods and services will also bear the tax.

Dwell Time

Dwell time is the time elapsed from the time the cargo arrives in the port to the time the goods leave the port premises after all permits and clearances are obtained.

Refund

in cases where importers and exporters pay duty in excess of the amount payable either due to the wrong classification of goods or due to incorrect value, incorrect rate of duty applied, etc. The importers and exporters are entitled to get a refund of such excess duty paid. If the refund is not paid to the importers/exporters within the stipulated time, the interest is payable on the amount of refund at the rate of 15% per annum as per section 27A of The Customs Act 1962.

Conclusion

With the digitalisation of the economy, a lot of taxes can be paid online and thus the Government has eased the process of taxation for the public. This also generates more revenue for the Government and makes the system transparent. The public can make maximum use of the services and move towards a truthful and efficient economy.

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