IIM-R - Business Taxes Lecture 15-20

BUSINESS TAXES
Lectures 15 to 20
Prof (Dr) Naveen Sirohi

Indian Institute of Corporate Affairs
About Me
A banker-turned-academician, Prof (Dr) Naveen Sirohi is the Founding Head of School of Finance &
Management at Indian Institute of Corporate Affairs (IICA), a think tank of the Government of India.
Possessing a unique blend of 20+ years of experience across corporate, academia and
government, he is contributing to the success of the corporate sector in India through the mandate of
capacity building, education, research and consultancy. After holding various managerial positions in the
banking industry across both public and private banks, he moved to academia and is now contributing
to provide academic and administrative leadership to the School. He has conducted 100+
Executive Education Programmes catering to more than 5000 corporate executives and government
officials on contemporary financial and leadership themes across levels (induction, middle and top
management) and across geographies (India and abroad).
Dr Sirohi is the Director of Forum of Indian Regulators (FOIR) Centre at IICA which is the knowledge, research and capacity building
hub for the Central and State Government regulators in India. He is also Founding HoD of two centres of excellence focussed on
regulatory governance and ADR (Mediation & Arbitration). He is also providing support to various priority initiatives of Government
of India like financial literacy, financial inclusion and financial reporting working closely with concerned government bodies/departments
like IEPFA, IPPB, NFRA. He contributed inputs and was acknowledged for the same in the Economic Survey 2021-22. He is also handling
the additional charge of Chief Financial Officer (CFO). Prof Sirohi is a visiting faculty in reputed institutions and has taken
sessions at National Centre for Good Governance (NCGG) at Lal Bahadur Shastri Academy of Administration (LBSNAA), National Institute of
Communication Finance (NICF), Indira Gandhi National Forest Academy (IGNFA), Gujarat National Law University (GNLU), Investor Education
and Protection Fund Authority (IEPFA), Department of Posts – Government of India, NTPC Power Management Institute, BHEL etc.
March 2024 Prof Naveen Sirohi, PhD 2

Topics to be Covered
Indirect Taxes
Overview of Indirect Tax System including GST, Service Tax, VAT, Customs etc. | Statutory
and Regulatory Framework (GST Law and Rules) | Evolution of GST in India | GST Council |
Division between Centre and States | Harmonized System of Classification (HSN) of
Goods
International Trade – Exports and Imports
Customs Duty | Classification of Goods | Arriving at Assessable Value | Duty Calculation
and Payment | Customs ICEGATE Portal | Levy of Duties like Customs, Anti-dumping, IGST
etc.

Direct and Indirect Taxes

Features of Indirect Taxes
• An important source of revenue
• Tax on commodities and service
• Shifting of burden
• No perception of direct pinch
• Inflationary
• Wider tax base
• Promotes social welfare (high taxes on harmful products)
• Regressive in nature and may increase disparities

Existing Indirect Tax Structure in India

Pre GST Tax Structure in India
Tax Structure
Direct Tax Indirect Tax
Income Tax
Wealth Tax Central Tax State Tax
Entry Tax, luxury

Excise Service Tax Custome VAT tax, Lottery Tax,
etc.

A Major Limitation of Old Regime

The BIG Shift

Journey of GST

The GST Revolution
10 Years 30+ Sub Groups 18000+ Hours of
in Making And Committees Discussion by GSTC
14 EC Meetings in 175+ Officers Constitution

10 Years & 13 GSTC Meetings Amendment & 5
Meetings in 6 Laws approved by
Months Collaborative Effort

Understanding CGST, SGST, UTGST & IGST

Understanding CGST, SGST, UTGST & IGST

Outside GST
Alcohol for human consumption
Power to tax remains with the State
5 Petroleum Products – Crude Oil, Diesel, Petrol, Natural Gas & ATF
GST Council to decide the date from which GST will be applicable
Tobacco
Part of GST but power to levy additional excise duty lies with Central Government
Entertainment Tax – Levied by local bodies

Power to tax remains with the States

GST Ecosystem
• CBIC – Central Board of Indirect Taxes
• GST Council
• Appellate Tribunal (AT)
• Advance Ruling Authority (ATA)
• GST Network (GSTN)

Role of CBEC (now CBIC)
• Role in Policy making: Drafting of GST Law, Rules & Procedures – CGST, UTGST & IGST Law
• Assessment, Audit, Anti-evasion & enforcement under CGST, UTGST & IGST Law
• Levy & collection of Central Excise duty on products outside GST – Petroleum Products & Tobacco
• Levy & collection of Customs duties
• Developing linkages of CBEC - GST System with GSTN
• Training of officials of both Centre & States
• Outreach programs for Trade and Industry

GST Council - Constitution
• Chairperson – Union FM
• Vice Chairperson - to be chosen amongst the Ministers of State Government
• Members - MOS (Finance) and all Ministers of Finance / Taxation of each State
• Quorum is 50% of total members
• States - 2/3 weightage and Centre - 1/3 weightage
• Decision by 75% majority
• Council to make recommendations on everything related to GST including laws, rules and rates etc.

GST Council - Decisions
• Threshold limit for exemption to be Rs. 20 lac (Rs. 10 lac for special category States)
• Compounding threshold limit to be Rs. 50 lac with
• Government may convert existing Area based exemption schemes into reimbursement based
scheme
• Four tax rates namely 5%, 12%, 18% and 28%
• Some goods and services would be exempt
• Separate tax rate for precious metals

GST Council - Decisions
• Cess over the peak rate of 28% on specified luxury and sin goods
• To ensure single interface – all administrative control over
• 90% of taxpayers having turnover below Rs. 1.5 cr would vest with State tax administration
• 10% of taxpayers having turnover below of Rs. 1.5 cr. would vest with Central tax
administration
• taxpayers having turnover above Rs. 1.5 cr. would be divided equally between Central and
State tax administration

GST Network (GSTN)
• A section 25 private limited company with Strategic Control with the Government
• To function as a Common Pass-through portal for taxpayers
• Submit registration application
• Tax payment
• Return of taxes
• To develop back end modules for 25 States (MODEL –II)
• Infosys appointed as Managed Service Provider (MSP)
• 34 GST Suvidha Providers (GSPs) appointed

GST Network (GSTN) – Salient Features

Appellate Tribunal
• The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the creation of
National Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) in January 2019
• The National Bench of the Appellate Tribunal shall be situated at New Delhi.
• GSTAT shall be presided over by its President and shall consist of one Technical Member (Centre)
and one Technical Member (State)
• There may be state benches consisting of two Judicial Members, a Technical Member (Centre) and a
Technical Member (state)
• GSTAT is equivalent to a Civil Court for trying a case. It can pass orders, hear cases, impose penalties,
and revoke or cancel registrations.

Advance Ruling Authority (ARA)
• An advance ruling helps the applicant in planning his activities, which are liable for payment of
GST, well in advance.
• It also brings certainty in determining the tax liability, as the ruling given by the Authority for
Advance Ruling is binding on the applicant as well as Government authorities.
• Further, it helps in avoiding long drawn and expensive litigation at a later date.
• Seeking an advance ruling is inexpensive and the procedure is simple and expeditious.
• It thus provides certainty and transparency to a taxpayer with respect to an issue which may
potentially cause a dispute with the tax administration.
• A decision of the Appellate authority is also treated as an advance ruling.
• the Authority for Advance Ruling (AAR) & the Appellate Authority for Advance Ruling (AAAR) is
constituted under the respective State / Union Territory Act and not the Central Act.

Advance Ruling Authority (ARA)
• This would mean that the ruling given by the AAR & AAAR will be applicable only within the
jurisdiction of the concerned state or union territory.
• It is also for this reason that questions on determination of place of supply cannot be raised with
the AAR or AAAR.
• Timelines are given within which the ruling is to be given by the concerned authority.

Main Features of the GST Act
• All transactions and processes only through electronic mode – Non-intrusive administration
• PAN Based Registration
• Registration only if turnover more than Rs. 20 lac
• Option of Voluntary Registration
• Deemed Registration in three working days
• Input Tax Credit available on taxes paid on all procurements (except few specified items)
• Credit available to recipient only if invoice is matched – Helps fight huge evasion of taxes
• Set of auto-populated Monthly returns and Annual Return
• Composition taxpayers to file Quarterly returns
• Automatic generation of returns
• GST Practitioners for assisting filing of returns
• GSTN and GST Suvidha Providers (GSPs) to provide technology based assistance
Main Features of the GST Act
• Tax can be deposited by internet banking, NEFT / RTGS, Debit/ credit card and over the counter
• Concept of TDS for certain specified categories
• Concept of TCS for E-Commerce Companies
• Refund to be granted within 60 days
• Provisional release of 90% refund to exporters within 7 days
• Interest payable if refund not sanctioned in time
• Refund to be directly credited to bank accounts
• Comprehensive transitional provisions for smooth transition of existing tax payers to GST regime
• Special procedures for job work
• System of GST Compliance Rating
• Anti-Profiteering provision - National Anti-Profiteering Authority being set up

Destination based Consumption Tax
• The tax would accrue to the State which has jurisdiction over the place of consumption which is also
termed as place of supply.
• Levied at all stages right from manufacture up to final consumption with credit of taxes paid at
previous stages available as setoff.
• In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final
consumer.
• Exports would be tax-free
• Imports taxed at the same rate as integrated tax (IGST) levied on inter-State supply of like domestic
products

GST Rates
• 0% on essential items, rice/wheat
• 5% on items of mass consumption
• 12%/18% standard rates covering most manufactured items and Services
• 28% on Consumer Durable Goods, Pan masala, tobacco and aerated drinks etc
• Basic philosophy behind these rates are that, to the extent possible, the current combined rate of
tax levied on individual goods by the Central and the State Governments should be maintained in
GST
• Uniform GST rate not possible at this stage as luxury goods and goods consumed by poorer sections
of society cannot be taxed at the same rate
• Rates will be notified by Government on recommendations of GST Council.

Fitment of various Goods & Services into GST

Neither Goods, Nor Service
The following would not constitute supply of Goods or Services (Schedule–III of the Act)
• by an employee to employer
• Services by any Court or Tribunal
• Functions performed by Members of Parliament / State legislature / Panchayats / Municipalities /
other local authorities.
• Duties performed by Constitutional functionary.
• Duties performed by Chairperson / Member / Director in a body of CG / SG / local authority, who is
not deemed to be an employee before commencement of this clause.
• Funeral, burial, crematorium/mortuary service, including transportation of deceased
• Sale of land
• Sale of building[ subject to clause (b) of paragraph 5 of Schedule II)
• Actionable claims, other than lottery, betting and gambling

Benefits of GST

Benefits of GST

Economies of GST / Benefit to Public

HSN Code
• HSN code stands for “Harmonized System of Nomenclature”.
• Introduced for the systematic classification of goods all over the world.
• HSN code is a 6-digit uniform code that classifies 5000+ products and is accepted worldwide.
• Developed by the World Customs Organization (WCO) and it came into effect from 1988.
How does it works?
• It has about 5,000 commodity groups, each identified by a six-digit code, arranged in a legal and
logical structure.
• It is supported by well-defined rules to achieve uniform classification.
Why is it important?
• Main purpose is to classify goods from all over the World in a systematic and logical manner.
• This brings in a uniform classification of goods & facilitates international trade.
• Over 98% of the merchandise in international trade is classified in terms of the HSN.
HSN Code
HSN in India
• India is a member of World Customs Organization(WCO) since 1971.
• It was originally using 6-digit HSN codes to classify commodities for Customs and Central Excise.
• Later Customs and Central Excise added two more digits to make the codes more precise, resulting
in an 8 digit classification.
Understanding the Code
• The HSN structure contains 21 sections, with 99 Chapters, about 1,244 headings, and 5,224
subheadings.
• Each Section is divided into Chapters. Each Chapter is divided into Headings. Each Heading is
divided into Sub Headings.
• Section and Chapter titles describe broad categories of goods, while headings and subheadings
describe products in detail.

HSN Code
Example
• Handkerchiefs made of Textile matters 62.13.90
• First two digits (62) represent chapter number for
Articles of apparel and clothing accessories, not
knitted or crocheted.
• Next two digits (13) represent the heading number
for handkerchiefs.
• Finally, last two digits (90) is the product code for
handkerchiefs made of other textile materials.
• India has 2 more digits for a deeper classification. If
the handkerchiefs are made from a man-made fibre,
then the HSN code is 62.13.90.10.

HSN Code – How it continuously evolves?

Service Accounting Code (SAC)
• Like goods, services are also classified uniformly for recognition, measurement and taxation.
• Codes for services are called Services Accounting Code or SAC
• For example: Legal documentation and certification services concerning patents, copyrights and other
intellectual property rights - 99 82 13
• The first two digits are same for all services i.e. 99
• The next two digits (82) represent the major nature of service, in this case, legal services
• The last two digits (13) represent detailed nature of service, i.e., legal documentation for patents etc.

When to Use HSN Code?
• HSN codes to be declared from 1st April 2021 (Vide CGST notification number 78/2020 dated 15th
October 2020)
• These HSN codes must be declared in every tax invoice issued by the taxpayer under GST.
• All 8 digits of HSN code is mandatory in case of export and imports under the GST.

UQC in GST
• As per CGST Rules, any tax invoice, credit note, debit note must have UQC or quantity unit description.
• Example - 1 kilogramme of wheat will be mentioned in invoice as 1 KGS, 1 litre of oil as 1000 MLT

Dual GST
• GST intends to replace the existing indirect taxes and will be split into two broad categories.
• CGST – Central Goods & Service Tax covers existing Central Indirect Taxes like excise duty, customs
duty and service tax.
• SGST – State Goods & Services Tax (SGST) covers existing state indirect taxes of VAT, entry tax,
entertainment tax, luxary tax, Octroi etc.
• CGST and SGST would be applicable on intra-state transactions
• Inter-state transactions (supply of goods or services from one state to another) and import of goods
and services would be taxed to Integrated Goods & Services Tax – IGST.
• Basic customs duty, municipal taxes, stamp duty, toll taxes etc would still continue to be levied under
their respective legislations outside GST.

Input Tax Credit
• One of the fundamental features of GST
• Represents the seamless flow of input credit across the chain (from the manufacture of goods till it is
consumed) and across the country.
• Means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and
pay the balance amount. When you buy a product/service from a registered dealer you pay taxes on the
purchase. On selling, you collect the tax. You adjust the taxes paid at the time of purchase with the
amount of output tax (tax on sales) and balance liability of tax (tax on sales minus tax on purchase) has
to be paid to the government. This mechanism is called utilization of input tax credit.
• For example- you are a manufacturer:
• Tax payable on output (final product) is Rs 450
• Tax paid on input (purchases) is Rs 300
• You can claim input credit of Rs 300 and deposit only Rs 150 in taxes

Input Tax Credit

Who can claim ITC?
• ITC can be claimed by a person registered under GST only if he fulfils ALL the conditions as prescribed.
1. The dealer should be in possession of tax invoice
2. The said goods/services have been received
3. Returns have been filed.
4. The tax charged has been paid to the government by the supplier.
5. When goods are received in installments ITC can be claimed only when the last lot is received.
6. No ITC will be allowed if depreciation has been claimed on tax component of a capital good
• A person registered under composition scheme in GST cannot claim ITC.

What can be claimed as ITC?
• ITC can be claimed only for business purposes.
• ITC will not be available for goods or services exclusively used for:
• Personal use
• Exempt supplies
• Supplies for which ITC is specifically not available

How to claim ITC?
• All regular taxpayers must report the amount of input tax credit(ITC) in their monthly GST returns of
Form GSTR-3B.
• The table 4 requires the summary figure of eligible ITC, ineligible ITC and ITC reversed during the tax
period.

How to claim ITC?
• No provisional ITC can be claimed from 1st January 2022 onwards.
• A taxpayer could have claimed any amount of provisional ITC until 9 October 2019. Later on, the
government restricted the provisional ITC as below:
• Accordingly, a taxpayer can claim ITC only if the same appears appears in their GSTR-2B.
• Hence, matching of the purchase register with the GSTR-2B is crucial for ITC claims.

GST – Impact on Cost and ITC – Practice Exercise
• ITC stands for Input Tax Credit
•

GST – Impact on Cost and ITC – Practice Exercise

Compensation Cess
• At the time of introduction of GST, the Constitution amendment provided that the Parliament, by law
shall provide compensation to States for five years for loss of revenue due to introduction of GST.
• Accordingly, the GST Compensation to States, 2017 was legislated which provides for release of
compensation against 14% year-on-year growth over revenues in 15-16 from taxes subsumed in GST.
• Provision for levy of cess on certain luxury items and demerit goods and this cess collected is to
credited into a Public Account known as GST Compensation Fund.
• The States were compensated for loss of revenue due to implementation of GST (w.e.f. 01.07.2017) for
5 years’ period till June, 2022.
• To safeguard that States have adequate and timely resources to combat Covid and related issues,
Centre borrowed ₹ 1.1 lakh crore in 2020-21 and ₹ 1.59 lakh crore in 2021-22 and passed it on to
States on a back-to-back basis. All the States agreed on this decision.
• Pertinently, the Government issued Notification No. 1/2022–Compensation Cess dated 24.06.2022
extending the Goods and Services Tax (GST) compensation cess until March 31, 2026.
Taxable Event
• Tax on supply of goods or services rather than manufacture / production of goods, provision of services
or sale of goods
• Powers to declare certain supplies as supply of goods or of services – Schedule II
• Powers to declare certain activities/transactions as neither supply of goods nor services - Schedule III
• On Intra-State supplies of goods or services - CGST & SGST shall be levied by the Central and State
Government respectively, at the rate to be prescribed
• On Inter -State supplies of goods or services - IGST shall be levied by the Central Government, at the
rate to be prescribed

Composition Scheme
• An optional and simpler tax provision for small taxpayers under GST
• Not available for the service providers
• Can be opted by those traders whose aggregate turnover is below Rs. 1.5 crore in a FY
• Limit changes in Himachal Pradesh and North-Eastern States to Rs. 75 lakh
• The trader can pay tax as a fixed percentage of his turnover without ITC benefit during the year
• PAN is taken into consideration for computation of turnover. Tax rates under composition scheme are:

Types of GST Returns
• There are a total of 13 returns under the Goods and Services Tax (GST) regime.
• These returns serve to capture different aspects of a taxpayer’s financial transactions and
obligations within the GST framework.
• However, it’s important to note that not all of these returns apply to every taxpayer.
• The applicability of these returns depends on the type of taxpayer and the nature of their GST
registration.
• GSTR-1: This return is for reporting outward supplies or sales (Monthly)
• GSTR-3B: A summary return that includes details of both outward and inward supplies, along with
the payment of taxes (Monthly or Quarterly)
• GSTR-4: Designed for taxpayers under the Composition Scheme, it provides a summary of their
turnover and tax liability.
• GSTR-5: Filed by non-resident foreign taxpayers engaged in taxable activities in India.

Types of GST Returns
• GSTR-5A: Filed by online information and database access or retrieval (OIDAR) service providers.
• GSTR-6: For Input Service Distributors to report distribution of input tax credit (ITC) among their units.
• GSTR-7: For taxpayers required to deduct Tax Deducted at Source (TDS) under GST.
• GSTR-8: Filed by e-commerce operators to report supplies made through their platform.
• GSTR-9: An annual return that provides a consolidated summary of all monthly/quarterly returns filed
during the financial year.
• GSTR-10: A final return filed when a taxpayer’s GST registration is canceled or surrendered.
• GSTR-11: Filed by persons having Unique Identity Number (UIN) to claim a refund of taxes paid on
their purchases.
• CMP-08: A quarterly return for taxpayers under the Composition Scheme to report their tax liability.
• ITC-04: Filed by taxpayers who are manufacturers to report the details of goods sent to a job worker
and received back.

Statements of Input Tax Credit
• In addition to these GST returns, there are also statements of input tax credit available to taxpayers,
namely:
GSTR-2A (dynamic)
• Provides a dynamic view of inward supplies as reported by the suppliers.
GSTR-2B (static)
• Offers a static view of inward supplies based on the supplier’s return.

Modes of Filing Returns
• All returns to be filed online.

GSTR 1 – Outward Supplies

GSTR 3B – Outward + Inward Supply + Taxes Paid

GSTR 9 – Annual Consolidated Return

GSTR 2A & 2B – Input Tax Credit Statements

QRMP Scheme
• Quarterly Returns with
Monthly Payment (QRMP)
Scheme is for eligible
taxpayers to file their Form
GSTR-1 and Form GSTR-3B
returns on quarterly basis,
while paying their tax dues
on monthly basis through a
challan.

Revision of Returns

Registration
• Registration in GST is PAN-based and state-specific
• One registration per State/UT
• However, a business entity having separate places of business in a state may obtain separate
registration for each place of business
• GST Identification Number called GSTIN – a 15-digit number and a certificate of registration
incorporating therein the GSTIN is made available to the applicant on the GSTN portal.
• Registration under GST is not tax-specific. In other words, a single registration works for all types of
taxes – CGST, SGST/UTGST, IGST and cesses

Persons liable for Registration

Applicable Threshold Limit

Indian Customs Duty
Major Acts
• Customs Act 1962 – is the main Act, which provides for levy and collection of Duty, Import / Export
procedure, Prohibition, Penalties, Offences etc.
• Customs Tariff Act 1975 – is for the classification and rates of Duty for Import and Export
• Rules under Customs Act – Under section 156 of Customs Act, 1962, Central Government has been
empowered to make rules, consistent with Provisions of the Act
• Notification under Customs Act – Various sections authorize Central Government to issue notifications
• Board Circulars – Are instructions and directions to Customs officials
• Public Notice – Issued by Commissioner of Customs. Can be issued for local requirement too.

Indian Customs Duty
Goods Imported in India
• Any goods brought into India from a place outside India but does not include goods which have been
cleared for home consumption.
• As per section 2(27) of the Customs Act, “India includes the territorial waters of India”.
Territorial Waters of India

• Territorial waters pertain to that portion of sea which is adjacent to the shores of a country
• The territorial waters extend up to 12 nautical miles from the base line on the coast of India. (Any bay,
gulf, harbor, creek, tidal water constitute Territorial Waters)
• 1 Nautical Mile = 1.1515 miles = 1.853 kms

Indian Customs Duty
Indian Customs Waters
• Indian Customs Water extends up to 12 nautical miles beyond territorial waters i.e. 24 nautical miles
from the nearest point of base line
• Significance of Indian Customs Water
• Customs Officer has the powers to arrest a person in India or within Indian Customs Water
• A Customs Officer can stop or search any vessel within Indian Customs Water

Indian Customs Duty
High Sea
• The open sea of the world
outside the Territorial Waters of
any nation
• Beyond 200 nautical miles
from the base line of any
country

Indian Customs Duty
Goods Imported in India – Transit of Goods (Section 53)
• These goods should be mentioned as Transit Goods in the Import General Manifest (IGM). They are
allowed by customs to be transited through Indian port without payment of duty.

Indian Customs Duty
Goods Imported in India –
Transhipment of Goods
(Section 54)
• These goods should be
transhipped to another
vessel;
• If transhipped to another
city/port in India: attracts
import duty.
• If transhipped to other
country: no payment of duty.

Imports
• Import with its grammatical variation and cognate expression, means bringing into India from a
place outside India
• Import is completed only when goods cross the Customs barrier
• The taxable event is the day of crossing of Customs barrier and not on the date when goods landed
in India or had entered Territorial Waters
• In the case of goods which are in the warehouse the customs barrier would be crossed when they
are sought to be taken out of the Customs and brought to the mass of goods in the country
Custom House Agent
• In order to assist importer and exporter, the services of CHA or Clearing Agents are available at
international ports and airports
• They are a body of professional experts duly licensed by Commissioner of Customs

Import Procedure
• Import General Manifest (IGM): A person in-charge of Vessel (i.e. Shipping Agent / Freight
Forwarders etc.) should submit IGM – i.e. details of cargo to be unloaded, goods to be transhipped
etc
• Bill of Entry: Importer should file Bill of Entry giving details of goods to be cleared from customs.
Date of filing of Bill of entry is relevant for deciding Duty liability
OR
• Warehousing – Keeping in warehouse without payment of Duty and later clearing on payment of
Duty when required

Documents for Imports
• Bill of Entry – Its types are: (for Manual Clearance)
• White Bill of Entry for Home Consumption
• Yellow Bill of Entry for Warehousing
• Green Bill of Entry for Ex Bond
• Invoice & Packing list
• Import License (wherever necessary)
• Certificate of country of origin, where preferential rate is claimed
• Insurance Memo / Policy
• Bill of Lading / Airway bill OR Delivery Order

Types of Customs Duty Leviable
• Basic Duty: It may be at the standard rate or in the case of Import from some countries, at the
preferential rate
Additional Customs Duty
• Additional Customs Duty, equal to central excise Duty, is leviable on like goods produced or
manufactured in India. The MRP based valuation prevailing under Central excise is extended
to Customs too
• Is also referred to as Countervailing Duty (CVD). It is payable only if the imported article is
such, if produced in India, its process of production would amount to ‘manufacture’ as per the
definition in Central Excise Act 1944
• Additional customs Duty is calculated on a value base of aggregate of value of the goods
including landing charges and basic Customs Duty. In order to counter balance the burden of
input Excise Duty

Types of Customs Duty Leviable
• Special Additional Duty of Customs : In order to counter balance various internal taxes like Sales
Tax and VAT and to provide a level playing field to indigenous goods which have to bear these
taxes.
• Cess: A Duty levied for specified purpose. Presently HE Cess and SHE Cess
• If goods are fully exempted from Duty or are chargeable to nil Duty or are cleared without
payment of Duty under prescribed procedure such as clearance under bond, no Cess would be
leviable

Anti Dumping Duty
• Large manufacturer from abroad may export goods at very low price compared to domestic market
• Such dumping may be with intention to cripple domestic market OR to dispose of their excess
stock
• To avoid such dumping, Central Government can impose anti dumping Duty , under section 9A of
Customs Tariff Act
• Anti Dumping Duty is not applicable for imports by SEZ, EOU unless it is specifically mentioned in
notification
• No CVD or SAD on Anti Dumping Duty
• No Anti Dumping Duty on goods Warehoused prior to levy of Anti Dumping Duty

Calculation of Customs Duty

Calculation of Customs Duty

THANK YOU
Email: prof.sirohi@gmail.com
You can connect with me on LinkedIn

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BUSINESS TAXES

Prof (Dr) Naveen Sirohi

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Direct Tax Indirect Tax

Entry Tax, luxury

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14 EC Meetings in 175+ Officers Constitution

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Entertainment Tax – Levied by local bodies

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