Basic Customs Duty (BCD)

Context

In September 2026, the government reduced Basic Customs Duty (BCD) on crude edible oils to moderate domestic prices. Duty on crude sunflower oil was cut to Nil, while that on crude soybean and palm oil was reduced to 5% to support domestic refining.

About Basic Customs Duty

1. Definition: BCD is the basic import duty imposed on goods entering India. It is levied under Section 12 of the Customs Act, 1962, with rates specified in the Customs Tariff Act, 1975.
2. Rate Determination: The applicable rate depends mainly on the HS (Harmonised System) codes classification of the imported product; preferential rates may apply based on the country of origin under trade agreements.
3. Basis of Levy: BCD is generally charged on an ad-valorem basis, i.e. as a percentage of the assessable value. Some goods may have specific or mixed duty rates.
4. Exemptions: The Central Government can grant full or partial exemptions or concessional rates for specified goods.

Key Functions

1. Protects Domestic Producers: Higher BCD makes imported goods more expensive, helping domestic industries compete with imports.
2. Generates Revenue: Contributes to the Union Government’s indirect tax revenue.
3. Promotes Domestic Manufacturing: Changes in BCD can support local production and value addition by making key inputs more affordable.
4. Affects Prices: Changes in BCD can influence the landed cost and domestic prices of imported goods.

How is BCD Determined?

1. Product Classification: The imported goods are assigned an HS (Harmonised System) code, which determines the applicable duty rate.
2. Value Assessment: Customs determines the assessable value based on the import value and applicable additions such as freight and insurance.
3. Duty Calculation: The applicable BCD rate is applied to the assessable value to calculate the duty payable.
4. Other Levies: IGST, cesses and surcharges, where applicable, are separate from BCD and are calculated under their respective provisions.

FAQs

Q1. What is Basic Customs Duty (BCD)?
Ans: BCD is the basic customs tax imposed on goods imported into India.

Q2. Which laws primarily govern BCD?
Ans: Section 12 of the Customs Act, 1962 provides the basic levy, while applicable tariff rates are specified under the Customs Tariff Act, 1975.

Q3. Is BCD the same for all imported goods?
Ans: No. Rates vary according to the type and HS classification of goods, while preferential rates may apply under trade agreements.

Q4. What does “ad-valorem duty” mean?
Ans: It means the duty is calculated as a percentage of the assessable value of the imported goods.