An indirect Duty, levied by the government to all of the goods imported or exported out of Country. This is applicable to all commodities, the government charges these duties during the export or import of goods and services to raise money and/or to shield the domestic establishments from the competitors from other countries.
In this, Import of goods is termed as import duty while duties levied on exported goods are termed as an export duty.
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How Duty Calculated –
1.Basic Custom Tax – the type of tax imposed under the Customs Act, 1962. The basic customs duty varies for different items and the Central government has the power to reduce or exempt any goods from the charges. It varies for different items from 5% to 40%.
2. CVD (Countervailing) / Additional Custom Duty – is an additional import tax levied on imported products (by the importing country) In cases where like the product isn’t so produced or manufactured in India, this tax will be at such rate which is leviable on the class or description of articles to which the imported article belongs.
3. Safeguard Tax – India started imposing a safeguard duty in July 2018 for two years. The duty was pegged at 25% for the first year, 20% for the next six months, and 15% for the last six-month period. But it failed because before the time it was imposed, around 90% of solar panels and modules used in local solar projects were imported, mostly from China and Malaysia, as they were cheaper than locally manufactured ones. But after that, this tax hasn’t changed anything. They still had to pay approximately the same amount of money as they were paying to local manufacturers.
3. Anti Dumping Tax – a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
4. National Calamity Contingent Duty (NCCD) – It is levied as an Excise Duty, for the purposes of the Union, by a surcharge, a duty of excise, to be called the National Calamity Contingent duty. This duty is imposed on pan masala, chewing tobacco and cigarettes.
5. Education Cess – This tax has been levied on items imported into India. It is chargeable at 2% on the aggregate of taxes of customs (except safeguard tax, countervailing tax, and anti-dumping tax) leviable on such goods.
6. Protective Duties – Private taxes are supposed to protect the interest of Indian Industry, imposed by the Tariff Commission. The purpose of this tax is to foster the growth of local industries and protect them from a flood of cheap foreign goods.
7. Auxiliary Tax of Customs – This tax is imposed under the Finance Act and is leviable all goods imported into the country at the rate of 50% of their value. However, this statutory rate has been reduced in the case of certain types of goods into different slab rates based on the basic duty chargeable on them.