Customs duties are levied on import of goods into India at the rates specified
in the Customs Tariff Act, 1975. The effective rates of customs duties may
vary pursuant to general and / or specific exemption or concession
notifications issued by the government in this regard.

Customs duties currently comprise the following:

  • Basic Customs Duty (BCD) – Current general peak rate is 15 per cent.
  • Countervailing Duty (CVD) – This duty is equivalent to central
    excise duty leviable on a like product manufactured in India. Current
    rate applicable to majority of the industrial products is 16 per cent
    plus 2 per cent education cess, taking the effective rate to 16.32 per
    cent. This duty is calculated on the value of product + basic customs
    duty.
  • Additional Duty of Customs (ADC) – This duty is levied to
    countervail the sales tax, value-added tax, local taxes and other
    charges leviable on the like goods on their sale or purchase or
    transportation in India. Presently, this duty is levied at 4 per cent on
    certain items viz items bound under the Information Technology (IT)
    Agreement and on specified inputs / raw materials for manufacture of
    electronic / IT goods. This duty is levied on value of product +basic
    customs duty + countervailing duty.
  • Education Cess – This cess is levied at 2 per cent on the amount of
    BCD +CVD.

In addition, government also levies anti-dumping and safeguard duties on
specified products for specified periods. “Value” for the purpose of levy of
customs duty is “transaction value” in the course of international trade in
arm’s length unrelated party transaction.

Import-Export Policy

Import of goods into and export from India is regulated by the Foreign Trade
Policy (the Policy) issued from time to time by Government of India. The
Policy remains in force for five years and is amended from time to time. The
Policy currently in force is for tax year 2004-09. Majority of goods are now
freely importable.