Type of Custom Duties

Custom duty act began in 1962 in order to maintain a smooth flow of exports and imports and to avoid exports or imports of goods that caused harm to the Indian society. There are some types of custom duties such as basic, additional, safeguard, anti-dumping duty etc.

Custom duties

Custom duty is the duty imposed on export and import of goods to avoid flow of unwanted good or products form one nation to another. The Customs Act of India began in 1962.

Types of custom duties imposed

Basic Custom Duty Basic custom duty is the duty imposed on the value of the goods at a specific rate. The duty is fixed at a specified rate of ad-volarem basis. The duty although was imposed from 1962 was amended from time to time and today this duty is referred by the Customs Tariff Act of 1975. The Central Government has the right to exempt any goods from the tax.

Additional Duty of Customs This duty is the additional duty levied upon the import of goods into India and this duty is equivalent to basic excise duty. This duty is also laid on Ad-volarem basis. The duty is also levied on exported goods based on the Custom Tariff Act of 1975.

Auxiliary Duty of Customs Under the Finance Act the duty is levied at the rate of 50% on the goods imported. However on some goods under statutory law the tax is reduced depending upon the types of goods.

Protective Duty This duty is imposed by the Custom Tariff Act 1951. This duty is imposed to protect the interest of the Indian companies or industries. These rates are recommeneded by the Custom Tariff Act.

Countervailing duty This duty is imposed by the Central Government when a country is paying the subsidy to the exporters who are exporting goods to India. This amount of duty is equivalent to the subsidy paid by them. This duty is applicable under Sec 9 of the Customs Tariff Act.

Anti Dumping Duty The Central government is imposing such duty on the goods that are dumped into India from the other nations at a very low price. The price of the goods may be very low as compared to the prices of the domestic market. They may intend to do so in order to sell the excess stock in their country. This duty is levied under 9A of the customs act. This duty is allowed according to the WTO agreement but the similar goods must be sold in India also.

Safeguard duty Even this duty is permissible under WTO agreement. It is levied to protect the interests of the domestic industries. Such duties are levied only when the goods are imported in large quantities. Due to the bulk imports the interests of the domestic industries be affected and hence this duty is levied.

National Calamity contingent duty This duty is imposed by Sec 129 of the Finance Act. The duty is levied on goods like tobacco, pan masala or any items that are harmful for health. The rate of the tax varies from 10% to 45% and different rates are applied for different reasons.


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