Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on import and export of goods. The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.
The rate of Customs duty varies depending on where the goods were made and what they were made of.
Custom duty in India is defined under the Customs Act, 1962, and all matters related to it fall under the Central Board of Excise & Customs (CBEC).
Types of custom duty
Basic Customs Duty (BCD)
Countervailing Duty (CVD)
Additional Customs Duty or Special CVD
Changes in Customs duty
In Budget 2019, the government announced a slew of changes to Customs duty in order to meet multiple objectives, including promotion of clean energy, curbing non-essential imports, boosting domestic manufacturing and raising revenue. Customs duty was cut on several inputs to incentivise domestic production and increased on finished products to garner additional revenues.
The government had said it was expecting a 19 per cent growth in Customs collection to Rs 1.5 trillion for 2019-20.