Yesterday I have been approached by a student who is taking higher education in India with the help of a sponsorship program. He got some goods, sent by his sponsors from abroad to help him in his course but was being made to pay custom duty. He was baffled that why he was being charged with duty as he was not going to sell the same and earn profit. The goods received by him is just for study purpose. He asked me to make him understand when a person can get goods as donations or gift totally free from custom duty. So here I am writing provisions related to custom duty on Import of Gifts in India from Abroad.
Custom Duty on Import of Gifts
All goods imported into India from abroad is liable to duties of Customs under Section 12 of the Customs Act and also is liable to all the restrictions under the Foreign Trade (Development & Regulations) Act 1992. However, the Government has exempted gifts received from abroad by persons residing in India from the whole of duties of Customs and from restriction under FT (D&R) Act. At present, import of goods upto the value of Rs. 5,000/- is allowed as gift, duty free. This exemption is allowed only for bonafide gifts imported by air or post. For the purpose of calculation of this value of Rs. 5,000/- the air freight or postal charges paid are not added.
Custom Clearance Permit of Imported Gifts
Import of gifts items, which is freely importable need no custom clearance permit. However, there are certain gift items that are not freely importable. In such a situation a special permit is required by the custom authorities. The main objective of the custom clearance permit is to allow the import of gift items which is other wise restricted or prohibited by Government of India for the use of charitable, religious or educational institute registered under a law or approved by the Central or State Government.
Application Procedure for Custom Clearance Permit (CCP)
An application for the grant of CCP for an item which is otherwise restricted or prohibited in the ITC-HS Classification may be made to Director General of Foreign Trade supported by the following documents.
- Applicant’s request on his company’s letter head or plain paper duly signed with all the details.
- Donor’s letter in original duly signed and indicating his name, address and the purpose of offering gift.
- Bank Receipt in original in duplicate/ Demand Draft / EFT details towards payments of application fee at the prescribed rate.
- Self certified copy of proforma invoice.
- Any other relevant document which applicant would like to enclose.
Exception to Pay Duty
No exemption is applicable if purchases are made in foreign countries which are imported into India and also not applicable if purchases are made through foreign currency transactions.
Any international purchases made at any online store/bay/forum/personal site/blog and get them declared as ‘gift’ or ‘sample’ and valued under INR 5,000/- does not simply satisfy the ‘exemption’ criterion as stated above. As because, this is actually a international purchase involving foreign currency transaction. It is quite likely that an absurd amount of duty may be levied irrespective of the rate chargeable as above. Therefore it’s better to ask the seller to attach the invoice stating as much info as possible along with the shipment and provide true statement in the Dispatch Note cum/and Customs Declaration Form.
Few Clarifications or FAQs
Q Whether donation received in kind is leviable to custom duty?
Yes, donations received is also leviable to custom duty. Only charitable organizations are being relieved from this but they are also required to fulfill few conditions before claiming exemptions.
Q. Whether the value of Rs. 5,000/- means the value of the goods in India or at the country of the sender?
The value of Rs. 5,000/- is the value of the goods in the country from where the goods have been dispatched. The sender may not necessarily be residing in the country from where the goods have been dispatched.
Q. Whether this concession is allowed for import through Land Border or by Ship?
No, the import has to be only through Air or through Post Parcel.
Q. Who can send the gifts?
Any person abroad can send gifts. There is no specific restriction that only relatives can send the goods. Business associated, friends, relatives, companies or acquaintances can also send the gifts to residents in India.