With the Union Budget 2022 fast approaching, all eyes are on Finance Minister Nirmala Sitharaman and the ministry to see what they have in store to help India’s economy hit by the Covid pandemic .
It is important to understand the key terms of the annual exercise. Let’s understand such a term – customs duty.
What is customs duty?
Customs duty is the tax levied on the import and export of goods. This is used by the government to increase revenue, regulate the movement of goods, and protect national industries.
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The customs duty rate is either specific or decided based on the value of the goods. It varies depending on where the goods are made and the materials with which they are made.
The Customs Act of 1962 defines customs duties in India and all matters relating thereto are dealt with by the Central Board of Excise & Customs (CBEC).
What are the different types of customs duties
1. Basic Customs Duty (BCD)
2. Countervailing Duty (CVD)
3. Additional Customs Duty or Special CVD
4. Duty of Care
5. Anti-dumping duty
While the revenue is a counterpart to customs duties, it is also levied to protect domestic industry from foreign competition.
In Budget 2019, the government announced a series of tariff changes to achieve different objectives. Customs duties have been reduced on several inputs to encourage domestic production and increased on finished products to generate additional income.
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