About Basic Customs Duty (BCD):
- BCD is a type of tax imposed on goods imported into India.
- It is levied on imported items under the Customs Act, 1962. The tax rate is levied as per the First Schedule to Customs Tariff Act, 1975.
- Purpose: To protect domestic industries from foreign competition, regulate trade, and generate revenue for the government.
- BCD is calculated as a percentage of the value of the imported goods, determined based on the customs tariff, i.e., it is fixed based on the ad-valorem.
- It can significantly impact the total landed cost of the imported items.
- The Central Government holds the power to exempt specific goods from tax.
- The calculation of BCD involves several steps:
- Classification of Goods: Imported goods are classified under specific Harmonized System (HS) codes, which determine the applicable duty rate.
- Assessment of Value: The value of the goods is assessed based on the transaction value, including the cost of goods, insurance, and freight (CIF).
- Application of Duty Rate: The BCD Tax rate is applied to the assessed value to determine the duty payable.
Other Types of Custom Duties:
- Additional Customs Duty:
- Additional Customs Duty, also called Special Countervailing Duty, is a tax that is applied to balance subsidies that exporting countries provide to their products.
- It helps level the playing field and ensures that domestic producers are not disadvantaged.
- Countervailing Duty (CVD):
- This duty counters foreign government subsidies on exports.
- When foreign producers receive subsidies, they can sell at a lower price, creating unfair competition for local industries.
- CVD safeguards local businesses from this unfair advantage.
- Special Additional Duty (SAD):
- SAD is levied on imports under the Central Excise Act and applies to the total value, including BCD and CVD.
- This duty shields domestic industries by offsetting the impact of low-cost imports.
- Anti-Dumping Duty:
- When foreign goods are sold in India at prices below their value in the exporting country, anti-dumping duty is applied.
- This duty prevents unfair pricing practices that could damage domestic industries.
- Protective Duties:
- These duties are designed to protect local industries from competition with cheaper imported goods.
- By increasing the cost of imports, protective duties make local products more appealing to consumers.
- Safeguard Duties:
- Imposed under Section 8B of the Customs Tariff Act, safeguard duties are temporary measures to protect local industries from sudden increases in imports.
- This duty gives domestic industries time to adapt and strengthen their market position.
- National Calamity Contingent Duty (NCCD):
- NCCD is applied to generate funds for responding to natural disasters and large-scale national emergencies.
- NCCD rate varies depending on the item and ensures quick resources are available for crisis response.
