The Central Board of Direct Taxes vide its notification dated 1st February 2022 has issued clarification on the issue of applicability of Social Welfare Surcharge (SWS) on goods that are exempted from basic customs duty or taxes or cesses which are levied as a duty of customs.
The Social Welfare Surcharge (SWS) is levied and collected, as a duty of customs, vide Section 110 of the Finance Act, 2018 (13 of 2018) and is calculated at the rate of 10 per cent. on the aggregate of duties, taxes and cesses which are levied and collected by the Central Government as a duty of customs on goods imported into India.
At present SWS applies at the rate of 10% of the aggregate of customs duties payable on import of goods and not on the value of imported goods.If aggregate customs duty payable is zero on account of an exemption, the SWS shall be computed as 10% of value equal to ‘Nil’ (as aggregate amount of customs duties payable is zero). Law does not require computation of SWS on a notional customs duty calculated at tariff rate where applicable aggregate of duties of customs is zero.
Therefore it has been clarified that the amount of Social Welfare Surcharge payable would be ‘Nil’ in cases where the aggregate of customs duties (which form the base for computation of SWS) is zero even though SWS has not been exempted.
