Learn about governing tariffs, rules, regulations, and all related matters for hassle-free customs clearance when shipping anything to India on SFL Worldwide using this detailed guide.
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What is Customs Duty and Taxes in India?
The term “Customs Duty” refers to the tax imposed on your goods while transported across international borders. The objective of customs duty is to protect each country’s economy, residents, jobs, environment, etc., by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country.
Every good has a predetermined rate depending on multiple factors and considerations. Countries determine customs value based on Harmonized Tariff Code, Material of Good, Manufacturing origin, the purpose of use, etc. Customs duty is calculated on the value of goods and includes freight cost, cost of insurance, and any other cost invoice in the transportation of goods.
Indian Customs Rules
Understanding the customs rules and regulations is imperative while shipping a product or cargo overseas. Below are some primary guidelines that exporters/importers should follow while shipping internationally.
Understanding Prohibited Items to avoid penalties
Review the list of prohibited items before you ship, as each country may have restrictions on certain items to be imported. For example, India prohibits the shipping of drones or electronic cigarettes into the country.
Avoid unwanted fees arising from incorrect declarations
Shipping used products as gifts is not allowed. Customs duty will be charged with additional fines and penalties if you do. When moving back to India, shipping used items is only permitted with accompanied baggage.
Check for Eligibility for Exemption under ToR
If you move back to India, you are eligible for exemption from customs duties under Transfer of Residence. All you would need to do is apply for Transfer of Residence and provide all the required documentation for the clearance. Forgetting to do this can cost you customs duty on the…
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How to avoid customs duty in India
Various factors determine how much customs duty charges and taxes on imported goods. Your customs duty is calculated based on Harmonized Tariff Code. Each product has a unique HTC code. It is crucial to mention the HTC code on the commercial invoice of any shipment. This will allow customs officers to determine accurate customs duties on products. If the HTC code is missing or entered incorrectly, you may face an inaccurate customs duty with additional penalties.
The true answer is that there is no way to avoid customs duties for any imported product from a foreign country. However, there are a couple of ways to prevent customs duty depending on the value and your shipment type. The customs duty is a percentage determined by the total purchase value of the product paid in a foreign country and is not dependent on quality, size, or weight.
In addition to the HTC code, it is essential to classify the reason for shipment – is your shipment a gift, sample, commercial shipment, or personal item under transfer of residence? Depending on the type of shipment, the Indian customs provides relief on customs duty charges.
What is Transfer of Residence (TR)?
Anyone who has settled abroad and contemplating a return or planning an extended stay in India can use the transfer of residency for relaxed customs rules regarding the import of their personal belongings.
Those returning or planning an extended stay in India should consider using transfer of residency to take advantage of relaxed customs duties. This facility allows the importer of personal or household to avoid paying customs duty on certain qualified items and pay reduced customs duty of certain items. Persons taking transfer of residence are no longer subject to any minimum stay requirements in India.
Customs Duty on Transfer of Residence
Duty-free or reduced duty allowance
TR process allows eligible candidates to avail duty-free import on certain household goods and reduced customs duty on others.
Depreciation
Entitlement
If household articles are used, the TR process will allow standard depreciation depending upon the type and age of the article.
Documentation requirements...
- Original Passport for Customs Clearance
- Valid Visa for non-Indian Passport
Transfer of Residence Eligibility
Foreign Nationals
To claim the transfer of residence, “Foreign nationals” must have a
-
one-year resident visa” from the date of arrival into India - must get a resident permit card within two weeks of arrival into India.
Indian Nationals
- Minimum stay of 2 years aboard, immediately preceding the arrival date on the transfer of residence.
- Total stay in India on a short visit during the preceding 2 years should not exceed 6 months
- Passenger or family members have not availed this concession in the preceding 3 years.
Transfer of Residence Eligibility
A passenger (including foreign nationals) returning after a minimum stay of two years or more, be allowed clearance free of duty for used personal and household articles, up to the aggregate value of Rs. 500,000/- Five Lakhs, provided the total stay in India on a short visit during the two preceding years should not exceed six months and has not availed this concession in preceding 3 years.
Items with 0% Duty Estimate
- Furniture
- Video Cassette Recorder or Player
- Disk Player
- Digital Video Disc Player
- Music System
- Microwave Oven
- Word Processing Machine
- Fax Machine
- Portable Photocopying Machine
- Washing Machine
- Personal Computer
- Laptop Computer
- Liquefied Petroleum Gas Cooking Range
- Liquefied Petroleum Gas Cooking Range
- Air-Conditioner
Items
Duty Estimate
Tube Color Television
15.45%
Video Home Theatre System
15.45%
Refrigerators of capacity above 300 liters or its equivalent
15.45%
Deep Freezer
15.45%
Cinematographic films of 35 mm and above
15.45%
Cigarettes, Cigars, Tobacco
15.45%
Hard Liquor: (Whisky, Rum, Gin, Vodka, Brandy, Bourbon, Cognac etc.)
160%
Mild Liquor: (Wine, Cinzano, Campari, Sherry, Champagne etc.)
160%
Beers (Made from Malt)
103%
Gold including bars, coins & ornaments, (restricted up to 1 Kg)
Rs: 2,837/10 gm
Silver (restricted up to 10 kgs) : Duty per 1kg
Rs: 3,615 / Kg
Firearms (including AIR GUN) & CARTRIDGES EXCEEDING 50:
103%
Flat Panel (LCD/LED/Plasma) Television
36.05%
Video camera or the combination of any such video camera with one or more of the following goods, TV Receiver, Sound recording or reproducing apparatus, Video reproducing apparatus.
36.05%
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