Basic Customs Duty (BCD)

Basic Customs Duty Latest News

Bringing immediate relief to patients with cancer and rare diseases, Union Budget 2026-27 proposed a full exemption of basic customs duty on 17 cancer-related drugs and medicines.

About Basic Customs Duty

• BCD is a type of tax imposed on goods imported into India. 
• It is levied on imported items under Section 12 of 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. 
• BCD rates usually range from 5% to 40% and depend on the item’s category and country of origin.
• 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. 

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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.
• Education Cess: 
  • It is a 2% additional charge on customs duties, used to fund educational initiatives in India. 
  • Education cess basically reflects the government’s commitment to improving education standards in the country.
• 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.

Source: TH