A Comprehensive Guide For Calculating Customs Duty On Watches Imported In India

The world of watches, adorned with craftsmanship and precision, often finds itself traversing the boundaries of nations, unveiling a fascinating interplay of customs duties. The allure of a finely crafted timepiece is met with an intricate web of customs regulations. Across countries, a different plethora of duties awaits those who seek horological treasures.

Introduction to Customs Duty

Customs duty on imported goods, including watches, plays a pivotal role in regulating trade and protecting domestic markets. For importers, an accurate calculation of the customs duty is imperative. It directly influences the total expense of importing goods thereby affecting overall profitability.

We will offer an all-encompassing guide on the intricacies of computing customs duty for imported watches in India. It will elucidate the various categories of customs duty, delve into the influencing factors of the calculation and furnish practical tips and examples to enhance your understanding of the procedure.

Luxury watches imports in India grew over 21% in the first half of 2023 reaching $100 million, reported by Mint

Types of Custom Duties Applicable on Watches

In India, imported watches are subject to customs duty in accordance with the Customs Act of 1962 and its associated regulations. This encompasses a spectrum of duties, including but not limited to the following:

• Basic Customs Duty (BCD):

The BCD is a percentage-based duty applied to the assessable value of the watch. The assessable value of the goods is determined by summing the cost of the item/s along with the incurred expenses for insurance and freight during the transportation to India.

• Customs AIDC:

The Agriculture Infrastructure and Development Cess (AIDC) is imposed on certain goods including wristwatches when imported in India.Top of Form

• Additional Customs Duty (ACD):

Additional Customs Duty or Countervailing Duty (CD) is imposed at a rate equivalent to the applicable excise duty on similar goods manufactured in India. It is calculated on BCD.

• Social Welfare Surcharge (SWC):

SWC is imposed at 10% of the combined amount of duties, taxes and cesses. This surcharge is intended to bolster the Government's dedication to enhancing education, healthcare and social security initiatives.

• Integrated Goods and Services Tax (IGST):

IGST is a tax levied on the total value of the imported watch. It is calculated as 18% of the assessable value plus the duties, taxes and cesses.

Swiss luxury timepieces have captured the interest of enthusiasts across India and esteemed brands seize the flourishing market prospects to attract sales with exclusive timepieces, such as this Vacheron Constantin Overseas Timepiece for India

Calculating Customs Duty for Watch Imports

To compute customs duty for imported watches in India, importers must furnish essential documents, including the bill of entry, invoice, packing list and insurance records. Subsequently, customs authorities assess the value of the goods, such as the assessable value and CIF (Cost, Insurance and Freight), to determine the applicable customs duty.

Similar to various asset classes, Indians are presently making substantial investments in luxury watches. Timepieces like the Patek Philippe 5236P with an in-line display perpetual calendar offer attractive ROI. Despite a 25% price increase for luxury watches in India, the demands face a consistent surge

Similar to various asset classes, Indians are presently making substantial investments in luxury watches. Timepieces like the Patek Philippe 5236P with an in-line display perpetual calendar offer attractive ROI. Despite a 25% price increase for luxury watches in India, the demands face a consistent surge

Factors Influencing Calculation of Customs Duty

The calculation of customs duty is a nuanced process influenced by a myriad of the following factors:

• Value of the Item:

The value of the imported item is ascertained by combining the expenses related to the goods, encompassing the cost of the item, insurance charges and the freight charges associated with its transportation to India.

• Country of Origin:

As certain nations hold distinct trade agreements and tariff rates with India, the country of origin influences the customs duty calculation.

• Classification of Items:

The Harmonized System of Nomenclature (HSN) codes are used to classify goods imported in India. Wristwatches are specifically categorized under clocks and watches and parts thereof.

Their classification as Tariff Item HSN codes 9101 / 9102 and standard rates of duty are defined as under:

Source, Central Board of Indirect Taxes & Customs

Steps for Calculation of Customs Duty for Watches Imported in India

Here is a step-by-step guide on how to calculate the applicable custom duty levied on wristwatch imports:

• Determine the Assessable Value of the wristwatch or its CIF:

This is derived by summing the cost of the items, along with the incurred insurance and freight charges.

• Identify Applicable Customs Duty Rates and GST Duty:

Identify the applicable Basic Custom Duty (BCD), Customs AIDC, Social Welfare Surcharge (SWC) and IGST Levy based upon classification as per HSN codes.

• Calculate Duty:

Calculate the Total Duty percentage by adding all applicable custom duty rates.

The Indian Customs Electronic Gateway (ICEGATE) portal offers a calculator for determining the structure of duty for wristwatches.

Here is a sample calculation of customs duty of a wristwatch imported in India from Switzerland with an assessable value of Rs. 2,00,000:

 Total Duty Amount on a wristwatch import with Assessable Value of Rs. 2,00,000:

Source, Central Board of Indirect Taxes & Customs

Basic Customs Duty (BCD) + Customs AIDC + Social Welfare Surcharge (SWC) + IGST Levy

20% (of assessable value) + 20% (of BCD) + 20% (of BCD + AIDC) + 18% (of assessable value + BCD + AIDC + SWC)

40,000 + 8,000 + 4,800 + 45,504 = 98,304 or 49.152% (of assessable value)

Import Duty Exemptions

There might be exemptions or reduced duties for certain categories of watches, based on trade agreements or specific government policies.

Influence on the Watch Market

The imposition of customs duty holds the power to steer the direction of the watch market. Whether it prompts a surge in the demand for domestic alternatives or continues to drive the pursuit of international luxury timepieces is a fascinating aspect to observe.

In 2021, luxury watch imports experienced a notable 19% growth, propelling India beyond nations like Kuwait, Ireland, Bahrain, Belgium, Portugal, Greece and Malaysia. However, waiting periods for sought-after brands such as A. Lange & Söhne persist, extending into periods of months or even years

Impact on Collectors and Enthusiasts

For those passionate about horology, customs duty becomes a pivotal consideration in the pursuit of their coveted timepieces. Some might explore avenues to acquire their desired watches within the confines of duty regulations, while others may weigh the options differently.

The pursuit of an exquisite timepiece isn’t merely about its mechanics or brand - it’s a narrative woven with passion, regulations and the essence of time itself.