CBIC notifications use complex language; need simplification, says GTRI

The complex language used in the notifications of the CBIC regarding customs duties needs simplification to help industry in understanding those orders as they carry crucial details, economic think tank GTRI said on Thursday.

The Global Trade Research Initiative (GTRI) said for this the CBIC (Central Board of Indirect Taxes and Customs) must use services of communication experts for help in drafting easy to understand notifications containing necessary details.

This will help over a lakh firms importing merchandise exceeding USD 660 billion in 2023 and it will also add to the ease of doing business with zero cost to the government and immense benefit of clarity to the Indian industry, it said.

"Notifying import duties is a critical mandate of CBIC. Firms pay import duties as notified by CBIC, but firms cannot do it on their own as the CBIC notifications use complex language and mostly refer to back notifications unintentionally hiding complete details needed to know the duty or import conditions on a product," GTRI Co-Founder Ajay Srivastava said.

Using simple language would also enhance transparency in its tariff and other notifications, he added.

Import duties in India vary significantly, ranging from 0-150 per cent.

These duties include components like basic customs duty, social welfare cess, Agriculture Infrastructure Development Cess (AIDC), and IGST (Integrated Goods and Services Tax).

Citing an example, the GTRI said a company importing tennis shoes would pay 35 per cent basic customs duty, 3.5 per cent social welfare cess, nil AIDC, and 18 per cent IGST.

However, the total duty is not a simple sum of these percentages but is calculated using a specific formula, resulting in a total duty of 63.43 per cent.

"It is impossible for a layman to find out individual duty components for a product and calculate the total duty payable," Srivastava said.

This complexity poses a challenge, especially for small firms, in determining the correct customs duty for their products, the GTRI said, adding that they have to seek expert help to understand and comply with the various duties, as the information is spread across numerous notifications each year.

Talking about a recent notification regarding some gold items, it said a person needed to look at, at least 11 notifications that amended the oldest notification.

"This roundabout reference makes understanding the update challenging. The notification could have simply stated that the government has imposed an AIDC of 5 per cent on gold or silver findings, avoiding the need for cross-referencing multiple documents," it added.

It suggested the CBIC to use straightforward, non-technical language to make notifications easily understandable and standalone, eliminating the need for cross-referencing.

Further, they should clearly state relevant products and corresponding duties in each notification to avoid confusion; and compile all duty-related information under various conditions into a single notification; and adopt a comprehensive approach like the Directorate General of Foreign Trade (DGFT) to ensure each notification is complete in itself.

"Implementing these suggestions would significantly elevate the effectiveness of CBIC notifications. Clear, direct, and comprehensive communication is key to ensuring compliance and ease of interpretation," it said.