About Basic Customs Duty (BCD):
- BCD is a type of tax imposed on goods imported into India.
- It is the principal custom duty levied on imported goods.
- It is levied under the Customs Act, 1962.
- It is calculated as a percentage of the assessed value of the goods, i.e., it is fixed based on the ad-valorem, with rates set out in the Customs Tariff Act, 1975.
- There is no specific rate of BCD, and it can vary on the basis of the country of origin and the types of goods being imported.
- The Central Government holds the power to exempt specific goods from BCD.
- Purpose:
- It protects domestic manufacturers from underpriced foreign competition by raising the landed cost of comparable imports.
- It generates revenue for the central government, since customs duty remains a significant indirect tax stream.
- It also functions as a policy lever. The government raises or removes BCD on specific inputs to support sectors such as electronics, renewable energy, and defence manufacturing.
- Because BCD applies before Integrated GST (IGST) on imports, it directly affects the final landed cost that a business builds into its pricing.
- The calculation of BCD involves several steps:
- Classification of Goods: Imported goods are classified under specific Harmonized System (HS) codes, which determine the applicable duty rate.
- Assessment of Value: The value of the goods is assessed based on the transaction value, including the cost of goods, insurance, and freight (CIF).
- Application of Duty Rate: The BCD rate for that HS code is applied to the assessed CIF value to arrive at the duty payable.
