Indian Fiscal System Customs and Excises Customs Duty

Indian Fiscal System Customs and Excises

Customs Duty • As per ancient custom, a merchant entering a kingdom with his goods had to make a suitable gift to the king. • Customs duty is derived from Customary i. e. a very old practise. • For us Customs duty has its origin in the British Period.

Rationale of Customs Duty • Primarily to provide revenue to the Govt. • Regulate imports and exports. WHY? ? ? To conserve foreign exchange. Regulate supply of goods in domestic market Provide protection to domestic market players say by restricting imports only to select goods.

Simply sa id ………… • • • …. In the pre sent time customs Which is duty mea levied by ns a tax. the Gove on impor rnment t of good s into Ind ia and exp ort out of India.

Determination of Customs Duty. • Determined on two basis • Ad-Valorem: - Duty on the value of goods. • Specific Duty: - Determined on the basis of measurement of goods.

Features of Customs Duty. • Customs Duty is an indirect tax levied by Central Government on import and export of goods. • Levied by the central govt. Good Source of Revenue for the Govt. • Also good for regulating import and export. • Collected by the Central Govt. • Used by the Central govt. • Import duty more than Export duty.

Features of Customs duty Cont. … • Customs duty is on goods as per section 12 of Customs Act. ØThe definition of goods includes • (a) vessels, aircrafts and vehicles • (b) stores • (c) baggage • (d) currency and negotiable instruments • (e) any other type of movable property.

Taxable Event • For Importation Import of goods will commence when they cross the territorial waters of India but is completed when it becomes part of the mass of the goods within the country. Taxable event is reached when the goods reach the customs barrier and the bill of entry for home consumption is filed. For Exportation commences when the shipping bill in respect of such goods is filed but the taxable event is completed when the goods cross the territorial waters of India

Types of Customs Duty • Basic Customs Duty: Basic Customs duty is levied on the value of the goods. Duty is levied at different rates on different goods • Additional Customs Duty: This is for articles which are produced in India but are imported This duty will be equal to the excise duty leviable on that article in India Where a like article is not manufactured in India, the duty would be leviable on the class of articles to which the imported article belongs.

Types of Customs Duties…. Contd • Countervailing Duty. Countervailing duty (CVD) is an additional import duty imposed on imported products (by the importing country) when such products enjoy benefits like export subsidies and tax concessions in the country of their origin (i. e. , where it is produced and exported). CVD is thus an import tax by the importing country on imported products. • Anti-dumping Duty on Dumped Articles. For articles dumped into India at less than their normal value. Dumping means exporting goods in a foreign market at a price which is less than their cost of production or below their "fair" market value. Dumping gives a hard competition to a domestic goods manufacturer Central Government may impose an antidumping duty not exceeding the margin of dumping. This duty shall be in addition to other custom duties .

Restrictions on Imports and Exports. • Another major purpose is to restrict illegal imports and exports besides revenue collection. Some reasons for prohibiting imports and exports. • • • Maintenance of the security of India Prevention of smuggling Prevention of shortage of goods of any description Prevention of injury to the economy of the country by the uncontrolled import or export of gold or silver. Protection of human, animal or plant life or health. etc.

Budget 2018 Customs Duty • In general Basic Customs duty rates unchanged. • Education cess and SHEC replaced by Social Welfare Surcharge of 10%. Various amendments effective from 2 nd February • BCD reduced from 5% to nil on solar tempered glass. • BCD increased from 7. 5% to 15% on LCD, LED or organic LED panels used for the manufacture of television.

Excise Duty If we divide taxes into direct and indirect taxes, the union excise duty is the largest indirect tax revenue for the central government. It was the largest tax revenue for the centre from 1947 to 2007; until it was pushed to the third spot by corporate income tax and personal income tax. Now it is the third largest tax and may be overtaken by service taxes in the near future.

Meaning of Excise Duty • Basically a production tax. • Imposed on manufactured items in India that are meant for domestic consumption • Excise duty is also now known as CENVAT (Central Value Added Tax).

Scope and applicability • Excise Duty can be levied, only on the fulfilment of the below mentioned conditions. Ø The Duty is on Goods. Ø The goods must be manufactured or produced. Ø Manufacture and Production must be in India. The Central Board of Excise and Customs (CBEC) are responsible for administering the laws that govern excise laws. The CBEC is an agency of the Department of Revenue, Ministry of Finance of India

Types of Excise Duty • Basic Excise duty: Levied on all excisable goods other than salt which are produced or manufactured in India. Basic Excise Duty [also known as Central Value Added Tax (CENVAT)]. • Special Excise Duty: Special excise Duty was attracted on all excisable goods on which there is a levy of Basic excise Duty under the Central Excises and Salt Act, 1944.

Rates of Excises-Budget 2018 • The effective tax incidence on Petrol and HSD( High Speed Diesel) remain Unchanged.