JOIN USBudget 2022 | What is Customs Duty?
With the Union Budget 2022 just around the corner, all eyes are on Finance Minister Nirmala Sitharaman and the ministry to see what they have in store to aid the Indian economy affected by the Covid pandemic.
It is important to understand key terms of the annual exercise. Let us understand one such term - Customs Duty.
What is Customs Duty?
Customs duty is the tax that is levied on imports and exports of goods. This is used by the government to raise revenues, regulate movement of goods and safeguard domestic industries.
The rate of customs duty is either specific or decided based on the value of goods. It varies on the basis of where the goods are made and what materials they are made of.
The Customs Act, 1962, defines the custom duty in India and all matters related to it fall under the Central Board of Excise & Customs (CBEC).
What are the different types of custom duty
1. Basic Customs Duty (BCD)
2. Countervailing Duty (CVD)
3. Additional Customs Duty or Special CVD
4. Protective Duty
5. Anti-dumping Duty
While revenue is a consideration for customs duty, it is also levied to protect the domestic industry from foreign competition.
In Budget 2019, the government announced a slew of changes to customs duty to meet different objectives. Customs duty was cut on several inputs to incentivise domestic production and increased on finished products to garner additional revenues.
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