India Customs Duty 2025

Levy:

• Customs duty is levied on goods imported into India.  
• The levy is governed by the Customs Act, 1962, and related regulations.  

Types of Duties:

• Basic Customs Duty (BCD): A primary duty levied on imported goods.  
• Integrated Goods and Services Tax (IGST): Levied on imported goods, equivalent to GST on domestic supplies.
• Compensation Cess: Levied on specific luxury and demerit goods.
• Social Welfare Surcharge: Levied on the aggregate of BCD.  
• Safeguard Duty: Imposed to protect domestic industries from injury due to increased imports.  
• Countervailing Duty (CVD): Imposed on subsidized imports.  
• Anti-dumping Duty: Imposed on goods imported at dumped prices.  

Tariff Structure:

• Customs duties are specified in the Customs Tariff Act, 1975.  
• The tariff is based on the Harmonized System of Nomenclature (HSN).
• Rates vary depending on the classification of goods.

Valuation:

• Customs duty is calculated on the assessable value of imported goods.  
• The valuation is determined according to the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Exemptions and Concessions:

• The Indian government provides exemptions and concessional rates for specific goods and sectors.  
• These exemptions are notified through government notifications.  
• Special Economic Zones (SEZs) and Export Oriented Units (EOUs) may have specific duty benefits.  

Import Procedures:

• Importers must file a Bill of Entry with the Customs authorities.  
• Goods are subject to customs clearance procedures.  
• Electronic filing is facilitated through the Indian Customs Electronic Data Interchange System (ICES).

Advance Ruling:

• Foreign investors can seek advance rulings on customs duty matters from the Authority for Advance Rulings (Customs, Central Excise & Service Tax).

Dispute Resolution:

• Disputes related to customs duty can be appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).  

Foreign Trade Policy:

• The Foreign Trade Policy, released by the Indian government, effects import and export regulations, which directly effect customs duties.  

India Dividend Distribution Tax

Abolition of Dividend Distribution Tax (DDT):

• The Dividend Distribution Tax (DDT), which was levied on companies distributing dividends, was abolished effective April 1, 2020.  

Current Dividend Taxation:

• Currently, dividends are taxed in the hands of the shareholders.  
• This applies to both resident and non-resident shareholders.

Taxation of Non-Resident Shareholders:

• Dividends received by non-resident shareholders are subject to tax in India.
• The tax rate applicable to non-resident shareholders depends on:
• The provisions of the Income Tax Act, 1961.
• The provisions of the applicable Double Taxation Avoidance Agreement (DTAA).
• The applicable DTAA between India and the shareholder's country of residence may provide for a lower tax rate.
• Withholding tax is applicable on dividends that are paid to non resident shareholders.

DTAA Provisions:

• India has DTAAs with numerous countries.  
• These agreements aim to prevent double taxation of income.  
• The DTAA may specify the maximum tax rate applicable to dividends.

Withholding Tax:

• Companies distributing dividends to non-resident shareholders are required to withhold tax at the applicable rate.
• The withholding tax rate is determined by the Income Tax Act and the applicable DTAA.

Tax Rates:

• The income tax act, sets out the rates that are applicable to non residents.
• DTAA's can change those rates.

Compliance:

• Non-resident shareholders are required to comply with Indian tax laws.
• This includes filing income tax returns, if applicable.
• Non resident share holders will need to provide a Tax residency certificate.  

Permanent Account Number (PAN):

• Non-resident shareholders may be required to obtain a PAN in India.
• It's crucial to note that tax laws and DTAA provisions are subject to change.
  Therefore, it's essential to seek professional tax advice specific to your situation.