Tax Reforms

Centre raises thresholds for prosecution under Customs Act


From UPSC perspective, the following things are important :

Prelims level : Custom Duty

Mains level : Customs frauds

The government has raised the thresholds for prosecutions and arrests under the Customs Act to ₹50 lakh from ₹20 lakh for smuggling and illegal imports of goods in baggage, and from ₹1 crore to ₹2 crore for cases involving commercial fraud.

What is Custom Duty?

  • Customs duty refers to the tax imposed on goods when they are transported across international borders.
  • In simple terms, it is the tax that is levied on import and export of goods.
  • Custom duty in India is defined under the Customs Act, 1962, and all matters related to it fall under the Central Board of Excise & Customs (CBEC).
  • The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.
  • The rate of Customs duty varies depending on where the goods were made and what they were made of.

Types of custom duty

  • Basic Customs Duty (BCD): It is the duty imposed on the value of the goods at a specific rate at a specified rate of ad-valorem basis.
  • Countervailing Duty (CVD): It is imposed by the Central Government when a country is paying the subsidy to the exporters who are exporting goods to India.
  • Additional Customs Duty or Special CVD: It is imposed to bring imports on an equal track with the goods produced or manufactured in India.
  • Protective Duty: To protect interests of Indian industry
  • Safeguard Duty: It is imposed to safeguard the interest of our local domestic industries. It is calculated on the basis of loss suffered by our local industries.
  • Anti-dumping Duty: Manufacturers from abroad may export goods at very low prices compared to prices in the domestic market. In order to avoid such dumping, ADD is levied.


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