No customs duty on imported gifts valued below ~5,000

For occasional gifting, the sender can split package to ensure the parcel is below the duty-free value

When Neeti Korgaonkar received a parcel from her sister in Australia, the postman asked her to pay about ~4,000 as Customs duty. Korgaonkar was surprised because the duty came to about 70 per cent of the value all items her sister had sent, which included clothes and soft toys for Korgaonkar’s twoyear-old daughter. Above all, this was a gift for personal use and not a commercial transaction.

Customs duty is applicable on all items, including gifts. There is, however, some relief for those who receive “imported” items as gifts. According to the laws, there’s no duty on goods worth ~5,000 or below if received as a gift. “Any person abroad can send gifts to relatives, business associates, friends, companies and acquaintances. The gifts have to be for genuine personal use,” says a senior Customs official.

To determine the value duty, postal charges or air freight is not taken into consideration. The Customs department considers the value of the goods in the country from where the items were dispatched. If the value of gifts crosses the specified limit, the receiver has to pay the duty on the whole consignment. If the value of the gift is ~5,500, for example, the duty will be levied on the entire value. “Goods above ~5,000 attract a duty of about 42 per cent, which includes basic the Customs duty, cess, and Integrated Goods and Service Tax,” says another senior Customs official from the Courier Cell.

If your relative is sending a gift to you this festival season, ensure that she or he marks the package as a gift. Not doing so can also attract duty along with penalties because it will be considered as a commercial import. One way some senders avoid high Customs charges is by splitting the gifts in multiple packages in such a way that the value of each remains below ~5,000. This is a feasible option only for occasional gifts. The department tracks the frequency and number of gifts to ensure that an individual is not using the route to transfer money circumventing the laws. If the Customs official comes across multiple packages from the same sender shipped to the same address, and the value of the package is below ~5,000, they take a call on a case-to-case basis whether to levy duties or not.

For quicker clearance, your

choice of shipping and appearance of goods also matter. Inbound shipments are scanned in X-ray machines before they are flagged for further inspection. Expensive shipping options have a higher probability of your goods marked for further inspection. It’s better that your relative removes the packaging of the gift, makes a smaller parcel and sends it through cheaper shipping options.

But avoid marking down the value of items as it can further delay the delivery. If Customs officials suspect the value has been lowered, they would assess the items based on the reference price sheets they have and levy duty accordingly. In certain cases, the officials can ask for invoices, related documents and other information to ascertain the value of the items. In the case of Korgaonkar, it’s possible Customs officials reassessed the gift value and that’s why she had to pay a higher customs duty.

While most common items can be sent as gifts, the Customs has a list of items that are prohibited or restricted. Second-hand goods and used electronics, for example, are restricted. “Avoid them as gifts. If discovered, the same will be adjudicated and fine and penalties will be imposed,” says the senior Customs official.