Customs duty recast may make telecom gear imports costlier

The government has tightened rules around custom duty payments by telecom gear importers in a bid to plug leakages to the tune of Rs 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 Rs 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.

For instance, India’s import of telecom parts and subscriber equipment under the “others” category with HS code 85176290 stood at Rs 28,565.69 crore worth of products in FY22, as per data available on the Department of Telecommunications (DoT) dashboard.

The government said it was apprised that some technology-related descriptions need to be better understood by all stakeholders for more effective identification of products and equipment covered under the Tariffs Act. After consultations between DoT and the finance ministry, several HS codes were amended in the Finance Bill 2023 and a couple of codes were deleted.

In March, the Central Board of Indirect Taxes & Customs issued a circular stating that the identifier code had to be declared in the bill of entry from April 1, 2023 onwards.

“It is decided that, in terms of the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations 2018, an identification of products/equipment under 85176290 and 85176990 shall be enabled from the beginning, that is, from the time of filing of import declarations itself, bringing certainty, for which an alpha numeric code/identifier will need to be additionally declared in the bill of entry by the importer with effect from April 1,2023,” the circular said. The government has listed various numeric codes for identification purposes.