Customs Tariff & Calculation Procedure

Introduction

Customs duty is an important part of national tax revenue, a chief source of central fiscal revenue and also a means of the contracting parties of the World Trade Organization to protect their domestic economics. Levying tax legally is one of the main tasks of the customs.

Definition

Customs duty is a kind of national tax revenue, which is its most essential nature. The nation is the subject of taxation of customs duty. Customs duty is collected from the tax payers by the customs on behalf of the nation. The object of taxation is the goods and article entering or leaving the customs territory. The laws, the administrative  rules and 


regulation formulated by the nation are the foundation of the customs duty collection.
Practically the so-called ''Import Duties and Taxes'' in some international conventions and agreements differ with the concept of import customs duties. ''Import Customs Duties'' include import customs duties and other domestic taxes levied on the import goods. After going through duty-levying procedure and approved by the customs, imported goods should be regarded as the domestic commodities and treated equally with home-made commodities and therefore should be levied domestic taxes lie wise. Usually domestic taxes are levied by the customs  during import period but the don't fall into the category of customs duties.

Object  of Taxation

Its prescribed by law that the object of taxation, also known as the tax object, refers to the goods articles entering of leaving the customs territory of a country which is the material basis of the obligation of customs duties. The object of taxation is the core element of customs duty system. It is a key standard to distinguish customs duties from other categories of tax and is also the basis of determining other elements of customs duty system.

So, here show customs object taxation flow chart for better understanding :-

Classification of Tax

The customs classification duty can be divided into different categories according to different standards of from different angels. According to the flow direction of the import and export goods. It can be divided into import duties, export duties and transit duties according to the taxation standard.

Customs classification is an international method used by customs division within the Seychelles revenue commission (SRC) to classify or commodities being traded in by various business and individuals.

Goods classified using an eight digit code or H.S code at national level that determines the rat of tax applicable to the item being imported.

{ Calculation of Taxes }

> Basic Customs Duties

> CVD

> Special CVD

> Protective Duties

> Safeguard Duties  

> Countervaling Duties of Subsidized 

> Anti Dumping Duty

Basic Customs Duties:

Basic Duty is a type of duty or tax imposed under the Customs Act (1962). Basic Customs Duty varies for different items from 5% to 40%. The duty rates are mentioned in the First Schedule of the Customs Tariff Act, 1975 and have been amended from time to time under the Finance Act.

CVD (CounterValing Duty)

Countervailing Duty (CVD) is an additional import duty charged on imported goods. The rate of such duty is equivalent to the rate of excise levied on such goods if it had been manufactured within the importing country.

Special CVD :

Additional Customs Duty or Special CVD. In order to equalize imports with locals taxes like service tax, VAT and other domestic taxes which are imposed from time to time, a special countervailing duty is imposed on imported goods.

Protective Duties :

Protective tariffs are taxes, duties, or other roadblocks (generally in the form of monetary fees) placed on foreign goods by a national or state government in order to protect domestic products and markets.

Safeguard Duty :

On Monday (July 30), the Narendra Modi government notified a 25% safeguard duty on imported solar panels for a period of two years. The duty, typically imposed during import surges, is meant to protect domestic manufacturers.

CVD of Subsidized :

Countervailing duties (CVDs), also known as anti-subsidy duties, are trade import duties imposed under World Trade Organization (WTO) rules to neutralize the negative effects of subsidies.

Anti dumping Duty :

Anti-Dumping, in economics, is a kind of injuring pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price below the normal price with an injuring effect. The objective of dumping is to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product.