InvestorQ : What is customs duty? Why it is being talked about right now wrt to the Union Budget?
Gaurav Patel made post

What is customs duty? Why it is being talked about right now wrt to the Union Budget?

Manisha Mehta answered.
2 years ago
Customs duty is a tax a government imposes on the imports and exports of goods in and out of the country. Customs duty is levied by the government in order to increase the country’s revenue, as well as to provide protection to domestic industries from competition from other countries. This duty is based on the value of the good being imported/exported or its weight, dimensions, etc. Import duties are levied on products that are imported in to the country and similarly, export duties are levied on products that are exported out of the country. Types of import duties are: - Basic duty - Additional customs duty - True countervailing duty or additional duty of customs - Anti-dumping duty/safeguard duty. By levying import duty on certain goods/products, the government tries to give a boost to its domestic producers so that domestic products are attractively priced, compared with cheaper imports. In the same manner, the government levies export duty, so as to make exports expensive. For example, when sugar prices soar in international markets, domestic producers prefer exporting their sugar to other countries, so that they can make more profit, which in turn creates a demand-supply mismatch in domestic market. In order to meet domestic demand, the government levies export duty. The government often uses the Union Budget to levy new taxes. Hence, industry players usually keep a keen eye on the new customs duty being announced. The customs duties levied in Budget 2018-19 are: - Custom duty on crude edible vegetable oils such as groundnut oil and safflower seed oil hiked from 12.5% to 30% - Custom duty on refined edible vegetable oil hiked from 20% to 35% - Custom duty hiked on sunglasses, cigarette lighter, toys, bus and truck tyres, and select furniture - Custom duty on imitation jewellery hiked from 15% to 20%; - Custom duty doubled on all watches to 20% - Import duty on LCD/LED/OLED panels and parts of TVs hiked to 15% - Custom duty on smart watches, wearable devices and footwear doubled to 20%.