FM Softens Blow On 4% Additional Customs Duty

The Finance Ministry has relaxed the blow on the 4 per cent additional customs duty by putting in place a refund mechanism for such a duty on all goods imported into India for subsequent sale within the country. This 4 per cent additional duty of customs was levied in 2005 to compensate for the sales taxes, VAT and other local taxes applied on products sold in India. The move to give a refund mechanism is being seen as an effort to address the concerns of the developed countries such as the US, which felt that the 4 per cent duty level was higher than the aggregate level of sales taxes and local taxes levied on products sold by Indian producers.