Custom duties are levied on nearly all goods that are imported into the nation. While export duties are levied on goods as specified by the Second Schedule, import duties are not levied on certain items like fertilizers, food grains, lifesaving drugs etc. Custom duty can be classified into the following types:
- Basic Customs Duty: This duty is imposed on the value of goods at a specified rate as it is fixed on an ad-valorem basis. After being amended time and again, it is currently regulated by the Customs Tariff Act, 1975. The Central Government, however, holds the rights to exempt specific goods from this tax.
- Countervailing Duty: CVD or Additional Customs Duty is levied on imported goods that fall under Section 3 of the Customs Tariff Act of 1975. It is the same as the Central Excise Duty which is levied on similar goods that are produced in India.
- Education Cess: The cess used to be levied at 2% and an additional 1% of the aggregate of customs duties.
- Protective Duty: This duty is imposed in order to shield the domestic industry against the imports at rates that are recommended by the Tariff Commissioner.
- Safeguard Duty: As the name suggests, this duty serves as a means of safeguarding the rise in imports. Sometimes, if the government feels that a rise in imports can damage the existing domestic industry, it may levy this duty.
- Anti-Dumping Duty: This duty is based on the dumping margin, i.e. the difference between the export price and the normal price. It is only imposed when the goods that are imported are below the fair market price.
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