Baggage – Advanced Tax Laws and Practice Important Questions
Question 1.
Mr. Jayesh, an Indian Entrepreneur, went to China to explore new business opportunities on 05-04-2019. The following details, regarding imports, are submitted by him with the Customs authorities on return to India on 20-02-2020.
- 2 Music systems each Worth ₹ 23,000
- Jewelry brought by Mr. Jayesh worth ₹ 49,000 (18 Grams)
Write a brief note on his eligibility with regard to duty-free baggage allowances as per the Baggage Rules, 2016.
Answer:
Computation of Total Customs duty payable on baggage:
| Particulars | Amount(₹) |
| a. 2 Music systems (₹ 23,000 × 2) | 46,000 |
| b. Jewellery | 49,000 |
| c. Total value of imported goods that can form part of General Free Allowance | 95,000 |
| d. Less: General Free Allowance (GFA) as per Rule 3 of Baggage Rules | (50,000) |
| e. Assessable Value on which customs duty is payable | 45,000 |
| f. Customs duty @ 35% | 15,750 |
| g. Add: Social Welfare Surcharge @ 10% of Customs Duty | 1,575 |
| h. Total Customs Duty payable | 17,325 |
Note:
Since Mr. Jayesh’s stay abroad does not exceed one year, he will not be eligible for additional jewelry allowance under rule 5 of the Baggage Rules, 2016.
Question 2.
Mr. Kapoor is a CS and Indian resident. He brought the following g items with him while returning to India from the USA:
- Personal Effects of ₹ 50,000
- Jewelry valued at ₹ 25,000
- One Camera costing ₹ 50,000
- Professional equipment ₹ 40,000
- Laptop worth ₹ 30,000
- Household goods of ₹ 30,000.
Compute the amount of Customs Duty payable by Mr. Kapoor on his baggage, by assuming the Rate of duty @ 38.50%.
Answer:
Computation of Customs Duty payable by Mr. Kapoor on baggage:
| Particulars | Amount(₹) | Amount(₹) |
| Personal effects (Exempt) | – | |
| Jewelry | 25,000 | |
| One camera | 50,000 | |
| Professional Equipment | 40,000 | |
| Laptop (One laptop is exempt in the baggage of a passenger above 18 years of age.) | – | |
| Household goods | 30,000 | |
| Total Value of dutiable goods on which GFA can be claimed | 1,45,000 | |
| Less: General Free Allowance (GFA) as per Rule 3 of Baggage Rules, 2016 | (50,000) | |
| Assessable Value on which customs duty is payable | 95,000 | |
| Customs Duty at 35% | 33,250 | |
| Add: Social Welfare Surcharge (SWS) at 10% or above | 3,325 | |
| Therefore, total customs duty payable including SWS | 36,575 |
Note:
The period of stay abroad of Mr. Kapoor has not been specified in the question. Hence, it has been taken as a short trip. Therefore, no additional allowance is allowed with respect to household articles, professional equipment, and jewelry. Only GFA is allowed, which is₹ 50,000 allowed for any resident Indian g returning to India after the visit of any number of days (without restriction) from countries other than Nepal, Bhutan, and Myanmar.
Question 3.
State the allowability or otherwise of the following with respect to the provisions of the Customs Act, 1962:
- Goods up to ₹ 10,000 per passenger per visit can be purchased against rupee payment in a duty-free shop at an International Airport.
- Bona fide baggage is exempt from duty.
- Total customs duty on baggage is 30%.
- Gifts through courier from abroad, not being prohibited goods, up to ₹ 5,000 can be imported duty-free.
Answer:
- False: Goods up to ₹ 5,000 per passenger per visit can be purchased against the rupee in a duty-free shop at International Airport.
- True: Bonafide Baggage accompanying passenger is exempt from duty.
- False: Total Customs Duty on Baggage is ₹ 38.50%
- False: Gifts through courier or post can be imported duty-free for up to ₹ 10,000
Question 4.
Mrs. and Mr. Kapoor visited Germany and brought the following goods while returning to India on 8.04.2020: –
- Their personal effects like clothes, etc. valued at ₹ 35,000
- A personal computer bought for ₹ 56,000
- A Laptop bought for ₹ 95,000
- Two liters of liquor bought for ₹ 1,600
- A new camera bought for ₹ 57,400
What is the amount of customs duty payable?
Answer:
In this question, Mrs. and Mr. Kapoor have brought certain goods while returning to India. The question doesn’t mention whether the same has been brought through separate baggage or through single baggage. If the goods have been brought in single baggage, the same would be supported by a single baggage declaration form and, in that event, the general free allowance will be available only once and the same cannot be pooled in respect of Mr. Kapoor and Mrs. Kapoor separately.
However, if the goods are brought in separate baggage supported by two separate baggage declaration forms, the general free allowance will be available separately to Mrs. and Mr. Kapoor.
Assumption 1: Mrs. and Mr. Kapoor have brought two separate pieces of baggage in a manner so as to lower the incidence of customs duty.
Computation of Customs Duty payable:
Mrs. Kapoor
| Particulars | Amount(₹) |
| Personal effects like clothes, etc. | Exempt |
| Laptop | Exempt |
| Personal Computer (assumed that it has been brought on account of Mrs. Kapoor) | 56,000 |
| Total dutiable goods which can accommodate in General Free Allowance | 56,000 |
| Less: General Free Allowance as per Rule 3 of Baggage Rules, 2016 | (50,000) |
| Assessable Value | 6,000 |
| Total Customs Duty payable at 38.50% (including SWS) | 2,310 |
Mr. Kapoor
| Particulars | Amount(₹) |
| Two liters of liquor (Assumed that it has been brought on account of Mr. Kapoor). It is allowed to accommodate in GFA as it will not fall in schedule I am not in excess of 2 liters. | 1,600 |
| New Camera (assumed that it has been brought on account of Mr. Kapoor) | 57,400 |
| The total value of dutiable goods that can accommodate GFA. | 59,000 |
| Less: General Free Allowance (GFA) as per Rule 3 of Baggage Rules, 2016 | (50,000) |
| Assessable Value on which customs duty is payable | 9,000 |
| Total Customs duty payable at 38.5% including SWS @ 10% | 3,465 |
Therefore, Total Customs duty payable under this assumption = ₹ 2,310 + ₹ 3,465 = ₹ 5,775.
Assumption 2: Only one baggage declaration form is given by Mr. Kapoor and Mrs. Kapoor.
Computation of Customs duty payable on baggage either by Mr. Kapoor; or by Mrs. Kapoor:
| Particulars | Amount(₹) |
| a. Personal effects like clothes, | Exempt |
| b. Laptop (1 Laptop is exempt for passengers over 18 years of age) | Exempt |
| c. Personal Computer | 56,000 |
| d. Two liters of liquor | 1,600 |
| e. New Camera | 57,400 |
| The total value of dutiable goods that can accommodate in GFA | 1,15,000 |
| Less: GFA under Rule 3 of Baggage Rules (As single baggage declaration form has been filed, it is not permissible to pool the GFA of Mr. Kapoor and Mrs. Kapoor) | (50,000) |
| Assessable Value on which Customs Duty is payable | 65,000 |
| Total Customs duty payable at 38.5% (including SWS @ 10%) | 25,025 |
Question 5.
Mrs. Kavita, a resident of India and carrying out her profession in the USA, returned to India after 9 months of stay and brought –
- Used personal effects (including jewellery: ₹ 60,000): ₹ 80,000
- Professional Equipment (including Personal computer: ₹ 45,000): ₹ 1,20,000
- Used Household articles: ₹ 25,000
- A laptop: ₹ 75,000
- Other Articles not falling under Annexure I: ₹ 32,000
Determine the duty payable by Mrs. Kavita.
Answer:
Computation of Total Customs duty payable by Mrs. Kavita:
| Particulars | Amount(₹) |
| a. Used personal effects like clothes, etc. (exempt) | Nil |
| b. Professional Equipments (including personal computer) | 1,20,000 |
| c. Jewellery | 60,000 |
| d. Household articles | 25,000 |
| e. Other articles not falling in Annexure I | 32,000 |
| Total Dutiable goods that can accommodate in GFA | 2,37,000 |
| Less: | |
| General Free Allowance (GFA) as per Rule 3 of Baggage Rules, 2016 | (50,000) |
| Allowance as per Rule 6 of Baggage Rules, 2016 | (1,00,000) |
| Assessable Value on which customs duty is payable | 87,000 |
| Total Customs duty payable (including SWS) | 33,495 |
Notes:
1. As per Rule 6, Personal and household articles, other than those mentioned in Annexure I or Annexure II but including articles mentioned in Annexure III, up to an aggregate value of ₹ 1,00,000 shall be allowed duty-free, stay of a passenger being from 6 months to 1 year.
2. As per Rule 5, duty-Free Allowance in the case of jewelry shall be allowed only if the stay abroad of passengers is exceeding 1 year. In the given case, the stay of the passenger i.e. Mrs. Kavita in the USA is for 9 months and hence, no such allowance is considered.
Question 6.
Briefly mention the provisions about temporary detention of baggage in the Customs Act, 1962.
Answer:
As per section 80 of the Customs Act, 1962 where:
- the baggage of a passenger contains any article which is dutiable or import of which is prohibited; and
- in respect of which a true declaration has been made under section 77, the proper officer may, at the request of the passenger detain such article for the purpose of being returned to him on his leaving India and if for any reason, the passenger is not able to collect the article at the time of leaving India, the article may be returned to him through any other passenger authorized by him and leaving India, or the article may be sent as cargo consigned in his name.
Baggage Notes
- The rate of Customs duty on baggage is 35% + 10% Social Welfare Surcharge (SWS). Therefore, the total effective rate of baggage is 38.5%.
- Exemptions/Duty-free Allowances in baggage are as follows:
For passengers arriving from countries other than Nepal, Bhutan, and Myanmar (Rule 3 of Baggage Rules, 2016): For Indian resident/Foreigner residing in India/Tourist of Indian origin (not being an infant): GFA—> ₹ 50,000 (Allowed on all articles except § those mentioned in Annexure I) For tourist of foreign origin: GFA —> ₹ 15,000 (On all articles except § those mentioned in Annexure I) In Case of infant, only used personal effects shall be allowed duty-free.
Notes:
- Here “infant” means a child not more than 2 years of age.
- Used personal effects and travel souvenirs are exempt in both the above cases.
For passengers arriving from Nepal, Bhutan, and Myanmar (Rule 4 of Baggage Rules, 2016): GFA: ₹ 15,000 for all passengers (not being an infant), allowed on all articles except those mentioned in Annexure In Case of infant, only used personal effects shall be allowed duty-free.
EXEMPTION FOR ONE LAPTOP: (For all passengers traveling from any country)
One laptop computer (notebook computer) is exempted from the whole of the duty of customs when imported by a passenger (other than a member of the crew) of the age of 18 years or above. (Notification No. 11/2004-Cus, dated 8-1-2004)
Duty-Free Allowance in respect of Jewellery: (Rule 5 of Baggage Rules, 2016):
Allowed only for passenger who has been residing abroad for over one year.
For gentleman passenger: Jewellery up to a weight of 20 grams with a value cap of ₹ 50,000.
For a lady passenger: Jewellery up to a weight of 40 grams with a value cap of ₹ 1,00,000.
Transfer of Residence (Rule 6 of Baggage Rules, 2016):
a. If stay abroad is from 3 months to 6 months: ₹ 60,000 is an exemption allowed towards personal and household articles, other than those mentioned in Annexure or Annexure II but including articles mentioned in Annexure HI.
b. Stay abroad from 6 months to 1 year: ₹ 1,00,000
c. Minimum stay of 1 year during the preceding 2 years:₹ 2,00,000
d. Minimum stay of 2 years or more: ₹ 5,00,000
Note about Annexures:
Annexure I: Negative list for allowance of Rules 3, 4, and 6.
Annexure-II: Negative list for allowance of Rule 6.
Annexure III: Allowed items for purpose of Rule 6