Export of goods and optimization of import taxes

Exports and imports into India are regulated under the Customs Act, 1962, and the Foreign Trade (Development and Regulation) Act, 1992.

The Customs Act provides for the levy of duties on imports into India. The duties are: (1) basic customs duty (BCD) – present peak rate is 10% – and applicable cess on customs duty, presently at 3%; (2) additional duty/countervailing duty (CVD), which is equivalent to the excise duty on like products manufactured in India – present peak rate is 10%; and applicable cess on CVD, presently at 3%, and (3) special additional duty (SAD), which is levied in lieu of VAT and sales tax, presently at 4%.

Consequently, the effective duty comes to 26.85%, assuming no exemptions are available.

Economic Laws Practice is a full-service law firm headquartered in Mumbai with offices in New Delhi, Pune and Ahmedabad. Ritesh Kanodia (riteshkanodia@elp-in.com) is an associate partner in the Mumbai office. His core practice areas include indirect taxes, excise, service tax and sales tax / VAT.