No need to pay customs duty on imported gifts valued below Rs 5,000

For occasional gifting, the sender can split the 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 Rs 4,000 as customs duty. Trivedi was surprised as the duty came to about 70 per cent of the value all items her sister had sent, which included clothes and soft toys for Trivedi’s two-year-old daughter. Above all, this was a gift for personal use and not a commercial transaction.

Customs duty is applicable on all items that are ‘imported’ in the country. There is, however, some relief for those who receive the ‘imported’ items as a gift. According to the laws, there’s no duty on goods worth Rs 5,000 or below if received as a gift. “Any person abroad can send the 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 the airfreight is not taken into consideration. The Customs department only 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 a gift is Rs 5,500, for example, the duty will be levied on the entire value – not just on the amount exceeding the specified limit. The duty is calculated at the rate and valuation on the date the postal authorities present the good to the Customs. “The sender and receiver should also keep in mind that items that are not eligible for exemption attract duty at 42 per cent,” says the Customs official.

If your close relative is sending a gift to you this festival season, ensure that they mark the package as a gift. Not doing so can also attract customs along with penalties. One way some senders avoid high customs charges is by splitting the gifts into multiple packages in such a way that the value remains below Rs 5,000. This is a feasible option only for occasional gifts. The department tracks the frequency and quantity of gift to ensure that an individual is not using the route to transfer money circumventing the laws.

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 suspicion. 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, make a smaller parcel and send it through cheaper shipping options. But avoid marking down the value of items as it can further delay the delivery. If the Customs feel that the value has been lowered, the officials can ask for invoices, related documents and other information to ascertain the real value of the items.

If your gift is bound to attract duty, you can send it through international courier companies. Many of these companies provide an option for the sender to also pay the customs duty beforehand to avoid receiver the hassles. The receiver just needs to send know your customer (KYC) documents to the courier to get the item.

While most of the common items can be sent as gifts, the Customs also has a list of items that are prohibited and restricted. Used electronics, for example, are restricted. Avoid them as gifts, too. To import used or refurbished goods, the receiver needs a licence from Directorate General of Foreign Trade and in certain cases even from Ministry of Environment and Forest.