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Govt Rules for Importing Items to India: Import Duties, Basic Requirements, Steps to Import

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Want to purchase goods from a foreign country and sell them in India?

This is all you should know before you get into the importing business.

You need to pay taxes on imported items: Import Duties

Let’s say you import “car tires” from the US, you need to pay the tax imposed by the US government on those car tires. This increases the price of imported goods. By this, the imported products become less “desirable” so buyers are encouraged to support the domestic market.

What are the different types of Import duties?

  1. Basic Customs Duty: Basic customs duty is the tax imposed on the value of the goods at a specific rate. Basic Customs Duty varies for different items from 5% to 40%. This can’t be claimed back under ITC.

  2. Additional Duty
    Additional duty is usually imposed to make the price of imported goods much higher than the goods by local manufacturers. This ensures that the local sellers do not lose out on the competition.
  3. Special Additional Customs duty
    Special Additional Duty is charged 4% on the total value of imports including CIF + Basic Customs duty + CVD. This 4% Special Additional Duty is refundable to the importer traders i.e. who sold their goods in India without changing identity/modification of goods.

  4. Anti- Dumping duty
    When your imported items are priced below Indian market value, then Govt imposes this tax on it. Anti-dumping tax is usually imposed on suspiciously cheap products and is a way to protect the domestic market.
    For example, a normal duty rating maybe 3% – but an anti-dumping duty maybe 37%.

  5. Safeguards Duty
    Some goods can cause serious injury and can be threatening to the domestic industry, in that regard, such duty can be imposed.

What are the basic requirements for the Import of Goods?

  • You need to obtain an IEC (Import- Export Code Number).
  • Every good that you import must agree with the terms and conditions mentioned in Section 11 of the Customs Act, 1962.
  • You need to be compliant with Foreign Trade (Development and Regulation), 1992

What are the steps to Import Goods from other countries?

Step 1: To show “Bill of Entry” and “Import General Manifest (IGM)” to the Superintendent or Appraiser.

There are generally 3 kinds of bill of exchange which are as follows:

  • Home consumption Bill of entry
  • Into bond Bill of entry
  • Ex- Bond Bill of Entry

Step 2: The next step is Self-Assessment and Verification

Under self-assessment, you need to declare yourself online the details of goods with the rate of duty applicable based on previously cleared bill of entry. The customs department will assess the value of goods and examination of goods based on your bill of entry previously cleared.

Step 3: To execute the necessary bonds and guarantees

The third step in this chain involves the execution of necessary bonds and guarantees.

Step 4: To make the payment of the Duty Imposed

Next, you need to make the payment of taxes imposed Within 5 days the duty must be paid, otherwise, it may lead to the payment of interest levied by the Central Government which can vary between 10%-36%.

Step 5: Examination of the Goods

Now, the authorized Officer in the Customs Authorities examines your goods to ensure that they are not Prohibited and checks if you have paid the appropriate duty. Then an Out of Customs Charge order is issued in case of success.

Do you have any questions? Please comment below.

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