The Global Trade Research Initiative (GTRI) recommends that the CBIC seek the help of communication experts to draft notifications that are easy to comprehend and include all necessary information.
This move could greatly benefit the Indian industry, as over one lakh firms are expected to import goods worth more than USD 660 billion in 2023. Simplifying the notifications would improve the ease of doing business with no cost to the government while providing clarity to the industry.
Import duties are a crucial requirement by CBIC. Companies must pay import duties as stated by CBIC, but the process is not straightforward due to the complex language used in the notifications. The notifications often refer to previous notifications, making it difficult to get the complete details required to understand the duty or import conditions on a product. The use of simple language in the notifications would improve transparency in tariff and other notifications, according to Ajay Srivastava, the Co-Founder of GTRI.
Import duties in India have a broad range of 0 to 150 per cent. These duties include several components such as basic customs duty, social welfare cess, Agriculture Infrastructure Development Cess (AIDC) and IGST (Integrated Goods and Services Tax). For instance, if a company imports tennis shoes, they would have to pay 35 per cent basic customs duty, 3.5 per cent social welfare cess, nil AIDC, and 18 per cent IGST.
However, the total duty is not a simple sum of these percentages but is calculated using a specific formula, resulting in a total duty of 63.43 per cent. “It is impossible for a layman to find out individual duty components for a product and calculate the total duty payable,” Srivastava said.
This complexity poses a challenge, especially for small firms, in determining the correct customs duty for their products, the GTRI said, adding that they have to seek expert help to understand and comply with the various duties, as the information is spread across numerous notifications each year.
Talking about a recent notification regarding some gold items, it said a person needed to look at, at least 11 notifications that amended the oldest notification. The notification regarding the imposition of an AIDC of 5 per cent on gold or silver findings is difficult to understand due to its roundabout reference. Instead of cross-referencing multiple documents, the notification could have been simplified by stating the government’s action directly.
The CBIC is advised to use clear and concise language in their notifications to make them easily understandable and standalone, without the need for cross-referencing. It is recommended that the notifications issued by CBIC should clearly mention the relevant products and corresponding duties to avoid any confusion. Additionally, all duty-related information should be compiled in a single notification under various conditions. It is suggested that CBIC should adopt a comprehensive approach similar to that of the Directorate General of Foreign Trade (DGFT) to ensure that each notification is complete in itself.
By implementing these suggestions, the effectiveness of CBIC notifications will be greatly enhanced. Clear, direct, and comprehensive communication is crucial to ensure compliance and ease of interpretation.
