Changes in Customs Duty Rate in Budget 2020

Changes in Customs Duty Rate in Budget 2020

Custom duty in India is defined under the Customs Act, 1962. All matters related to custom duty fall under the Central Board of Excise & Customs (CBEC). The CBEC, in turn, is a division of the Department of Revenue of the Ministry of Finance. CBEC has various divisions that take care of the field work including Commissionerate of Customs, Customs, Customs (preventive and Central Excise Zones, Central Revenues Control Laboratory and Directorates etc. CBEC also oversees proper tax administration for foreign and inland travel.

The Customs Act, 1962 confers the government following powers:

  • Levy and collect duty on exports and imports.
  • Levy and Collect Penalties.
  • Prohibit Export and Import of Goods.
  • Prescribe procedures for importing/exporting.
  • Formulating policies related to collection or levying of custom duties, custom duty evasion, smuggling prevention and administrative decisions related to customs formations.

The Customs duty is not only a source of revenue for a country but also a tool to control movement of goods to and from the country. It helps Governments in regulating movement of goods, especially prohibited and restrictive goods, in and out of any country. Hence, the objective behind levying customs duty is not only to earn revenue but also to safeguard each nation’s economy, jobs, environment, residents, etc., It also helps Governments protect domestic businesses from multinational companies dumping cheap goods in the country.

Basis of Charge of Customs Duties:

  • Import Duty: Duties levied on import of goods are termed as import duty
  • Export Duty: duties levied on exported goods are termed as export duty.
  • Ad Valorem: If duties are based on the value of goods, then they are called as ad valorem duties.
  • Specific Duty: Duties levied on goods based on their quantity, weight and other features.

Various Types of Duties:

Basic Custom Duty:

  • Basic custom duty is applicable on imported items that fall under the ambit of Section 12 of the Customs Act, 1962.
  • These duties are levied at the rates prescribed in First Schedule to Customs Tariff Act, 1975, under the terms specified in Section 2 of the act.
  • The levied rates may be standard or preferential as per the country of import.

Protective Duty:

  • Protective duty may be imposed to shield the domestic industry against imports at a rate recommended by the Tariff Commissioner.


  • Education cess is levied at 2% and Higher Education Cess at another 1% of aggregate of customs duties. Hence, total 3% cess on customs duty.

Anti-dumping Duty:

  • Anti-dumping duty may be imposed if the good being imported is at below fair market price, and is limited to the difference between price at which goods are important and fair market price (dumping margin).

Safeguard Duty:

  • Safeguard duty is levied if the government feels that a sudden increase in exports can potentially damage the domestic industry.

Changes in Customs Duty in Budget 2020:

With a view to promote Make in India movement, the Government in Budget 2020 increased Customs Duty of following goods.

Commodity Old Rate New Rate 
House hold Appliances like fan, mixer, grinder, water heaters 10% 20% 
Kitchen ware 10% 20%
Mattresses 20% 25% 
Water Cooler, Refrigerated Farm Tanks, Industrial Ice Cream Freezer 7.5% 15%
Headphone 10% 15%
Footwear 25% 35%
Furniture 20% 25%
Toys 20% 60%
Refrigerators and AC Compressors 10% 15%
Completely built units of commercial vehicles other than electrical 30% 40%
Completely built units of commercial electric vehicles 25% 40%
Semi-knocked Units of Commercial Vehicles 10% 15%
Colour TV picture tubes 0% 10%
Charger 0% 20%
Newsprint, Uncoated Papers and Light Weight coated papers 10% 5%

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