What is custom duty explain its nature role merits and demerits?
Answers
Custom duty refers to tax levied on imports and exports of goods within a country. The rates on custom duty vary from either specific or on ad valorem which is based on price of the good. Customs duties may also be levied to protect the domestic industry from foreign competition.
Merits:
1. Protects the domestic industry from foreign competition.
2. Enhances government revenue.
3. Protects consumer against demerit goods.
Demerits:
1. Method of levy of the tax
2. Objections to specific duties
3. Consumer choice is limited
Custom duty is a tax which is levied on the different types of goods and services both importer from India and exported from India.
This custom duty is a way of generating revenues that is further used for the development of the country.
These taxes are necessary both for import as well as export.