Customs duty is a tariff or a tax that is imposed on goods when they are imported (brought into the country) or exported (sent to another country).

Customs duty is levied by the government in order to increase the country’s revenue, as well as to provide protection to domestic industries from competition from other countries. This duty is based on the value of the good being imported/exported or its weight, dimensions, etc. Import duties are levied on products that are imported in to the country and similarly, export duties are levied on products that are exported out of the country.

Types of import duties are:

- Basic duty

- Additional customs duty

- True countervailing duty or additional duty of customs

- Anti-dumping duty/safeguard duty.

By levying import duty on certain goods/products, the government tries to give a boost to its domestic producers so that domestic products are attractively priced, compared with cheaper imports. In the same manner, the government levies export duty, so as to make exports expensive.

Import or customs duty has been in the news because the Indian government hiked the customs duty on all goods imported from Pakistan to 200% with immediate effect. The action follows the Pulwama terrorist attack that killed about 40 Central Reserve Police Force (CRPF) personnel on Thursday.