Basic Customs Duty

Basic Customs Duty Latest News

The Government recently reduced the Basic Customs Duty (BCD) on major imported crude edible oils with a view to moderating domestic edible oil prices. 

About Basic Customs Duty 

• BCD is a type of tax imposed on goods imported into India. 
• It is the principal custom duty levied on imported goods. 
• It is levied under Section 12 of the Customs Act, 1962. 
• It is calculated as a percentage of the assessed value of the goods, i.e., it is fixed based on the ad-valorem, with rates set out in the Customs Tariff Act, 1975.  
• There is no specific rate of BCD, and it can vary on the basis of the country of origin and the types of goods being imported.  
• The Central Government holds the power to exempt specific goods from BCD.
• Purpose: 
  • It protects domestic manufacturers from underpriced foreign competition by raising the landed cost of comparable imports. 
  • It generates revenue for the central government, since customs duty remains a significant indirect tax stream. 
  • It also functions as a policy lever. The government raises or removes BCD on specific inputs to support sectors such as electronics, renewable energy, and defence manufacturing. 
  • Because BCD applies before Integrated GST (IGST) on imports, it directly affects the final landed cost that a business builds into its pricing. 
• 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 rate for that HS code is applied to the assessed CIF value to arrive at the duty payable.

News: NOA

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