Customs Duty is a type of indirect tax levied on goods imported into India as well as exported from India. In India, basic law for levy and collection of custom duty is Customs Act 1962 . It provides for levy and collection of duty on imports and exports.
Mainly, import duties is calculated as a percentage of the custom value of the import. Custom values always varies by country. Rate of duty depends on categories of products. In some countries, customs value is based on FOB value as:
Duty=duty % x product price
And in some countries, the customs value is based on cif value as:
Duty = duty % x (product price + cost of shipping + cost of insurance)
Import duty can also be calculated based on a unit of measure, for instance weight, dimensions, etc. (specific duty):
Duty = $X per kg/liter/piece
There are various methods to calculate import valuations. One of the common used method is ‘transaction value’ method. It is based on the price paid or payable by a buyer to a supplier for the imported goods. For this, you will need to provide evidence of the price paid with your import entry, eg: a copy of the seller’s invoice.
If they’re not already included in the seller’s price, you must add the cost of:
For imported goods from a processor, an organization that assembles or otherwise works on one or more sets of existing products to create your new imported products- value of transaction can be built up by adding to the processing costs, the value of any materials or components you provided to the processor.