Topic 04 of 6 · Chapter 08 · Indian Economy
Customs Duty, Excise Duty & Other Taxes
Import duty, export duty, basic customs duty, anti-dumping duty, and other indirect taxes in India.
📋 In This Article
1. Customs Duty
Customs duty is a tax levied on goods imported into or exported from India. It is governed by the Customs Act, 1962.
| Type | Description |
|---|---|
| Basic Customs Duty (BCD) | Standard duty on imports; varies by product |
| Countervailing Duty (CVD) | Equalises imported goods with domestically produced goods (now replaced by IGST) |
| Anti-Dumping Duty | Imposed when foreign goods are sold below cost to protect domestic industry |
| Safeguard Duty | Temporary duty to protect domestic industry from sudden surge in imports |
| Export Duty | Tax on exports (rare; used to prevent shortage of essential goods) |
⭐ Anti-Dumping Duty: When China sells steel in India at ₹20,000/tonne while the cost of production is ₹30,000/tonne, it is “dumping.” India imposes anti-dumping duty to protect Indian steel companies. This is allowed under WTO rules.
2. Excise Duty
Excise duty is a tax on the manufacture of goods. Most excise duties have been subsumed into GST. However, excise duty still applies to:
- Petroleum products: Petrol, diesel, ATF, natural gas, crude oil
- Alcohol for human consumption: Taxed by states
- Tobacco products: Central excise + GST
💡 Why Petroleum is Outside GST: Petroleum products are a major source of revenue for both Centre and States. Including them in GST would reduce their tax revenue significantly. States are reluctant to give up this revenue. This is why petroleum remains outside GST despite being a major pending reform.
3. Other Important Taxes
- Securities Transaction Tax (STT): Tax on buying/selling of securities on stock exchanges
- Stamp Duty: Tax on legal documents (property transactions, share transfers) — levied by states
- Property Tax: Tax on property — levied by local bodies
- Professional Tax: Tax on professions — levied by states (max ₹2,500/year)
- Dividend Tax: Tax on dividends received — now taxed in hands of recipient
4. Key Points for Exam
🔑 Must-Remember Facts
- Customs duty governed by: Customs Act, 1962
- Anti-dumping duty = protect domestic industry from below-cost imports
- Petroleum products are outside GST
- Excise duty on petroleum = major revenue source for Centre
- STT = Securities Transaction Tax (on stock market transactions)
- Stamp duty = levied by states on property transactions
- Professional tax = levied by states; max ₹2,500/year
- Property tax = levied by local bodies
- CBIC administers: Customs duty, GST, Central Excise
- India’s customs duty structure: BCD + Social Welfare Surcharge + IGST