Customs duty recast may make telecom gear imports costlier

The government has tightened rules around customs duty payments by telecom gear importers in a bid to plug leakages to the tune of ₹500-1,000 crore, a move which may increase the cost of equipment such as routers, modems, set-top boxes amongst others shipped from overseas. The government has amended and deleted certain harmonised system (HS) codes in the Customs Tariff Act to plug leakages and clear the air around custom duty payments by importers.

Officials aware of the details said while most telecom products attract 20% customs duty, there are some nil duty items and several in the 10% category. "In absence of clarity around identification, many telecom products were being imported at lower duty, resulting in an estimated ₹500-1,000 crore losses for the central exchequer," an official told ET on condition of anonymity.

He added the government has not made any changes in custom duty rates but provided clarity in identifying products and removed redundant categories.
For instance, the Finance Bill 2023 has deleted a couple of non-relevant HS codes in the First Schedule of the Customs Tariff Act. With the deletion, importers can no longer procure products by terming them as subscriber-end equipment and high bit-rate digital subscriber line systems (HDSL). Further, a clear identification has been given for products, which will allow the government to track the kind of gear being imported.

"Earlier, many products were imported under "others" category of the HS codes as no clear identification was there. Now, we have identified the products and can now monitor the kind of equipment being brought into the country," the official said.

He added that certain importers were getting products like routers by terming them as subscriber-end equipment as it draws nil duty. "There must be some products with nil duty due to WTO obligations, but importers have to pay the right amount of duty and not masquerade dutiable products under the nil category," said the official.