Guide · Duty and landed cost
How import duty is calculated in India
For importers6 min readUpdated
The short answer
Indian import duty is calculated on the assessable value of the goods, which is the CIF value plus a 1% landing charge in most cases. Basic Customs Duty comes first, then Social Welfare Surcharge on that duty where it applies, and IGST is charged on the value plus those duties. Anti-dumping, countervailing or safeguard duties are added where they apply.
Key takeaways
- The duty base is the assessable value, not the invoice price.
- IGST is charged on top of the other duties, so it is usually the largest single line.
- The HSN code decides the rates, so a wrong code changes everything below it.
- Registered businesses can usually claim IGST paid on imports as input tax credit, but BCD and SWS are a real cost.
The build-up, step by step
Customs works from a value and adds each levy in a fixed order. The order matters because later levies are charged on the earlier ones.
- 1
Start with the CIF value
Cost of the goods (FOB), plus freight, plus insurance, converted to rupees at the exchange rate notified by customs for that period.
- 2
Add the landing charge to get the assessable value
Customs adds a landing charge, 1% of CIF in most cases, to reach the assessable value that duty is charged on.
- 3
Apply Basic Customs Duty (BCD)
BCD is a percentage of the assessable value (or a specific amount per unit for some goods), at the rate set for the HSN code or by an exemption notification.
- 4
Add Social Welfare Surcharge (SWS) where it applies
SWS is charged as a percentage of the BCD, not of the goods value. It applies to many goods, though some are exempted by notification.
- 5
Add trade-remedy duties if they apply
Anti-dumping, countervailing and safeguard duties apply only to listed products from listed origins, for a limited period.
- 6
Charge IGST on the total so far
IGST is charged on the assessable value plus the duties above. Its rate depends on the product.
A worked example
The rates below are examples chosen to show the arithmetic. They are not the rates for any particular product, so look up the rates for your own HSN code before relying on a number.
| Line | Basis | Amount (₹) |
|---|---|---|
| CIF value | Goods + freight + insurance | 10,00,000 |
| Landing charge | 1% of CIF | 10,000 |
| Assessable value | CIF + landing charge | 10,10,000 |
| BCD | 10% of assessable value | 1,01,000 |
| SWS | 10% of BCD | 10,100 |
| IGST | 18% of (assessable value + BCD + SWS) | 2,01,798 |
| Duty and tax payable at the port | BCD + SWS + IGST | 3,12,898 |
Landed cost is more than this: add port and terminal charges, customs broker fees, inland transport and any demurrage. The free landed cost calculator does the whole stack with your own rates.
What changes the number
- The HSN code. Two similar-looking products can sit under different headings with different BCD and IGST.
- Origin. A free trade agreement can lower BCD for goods that meet its rules of origin, with the right certificate.
- Conditions in the notification. Some rates apply only above or below a value, for a particular use, or for goods of a certain description.
- Trade remedies. Anti-dumping or safeguard duties can add a large amount for specific products and origins.
- The exchange rate. Customs uses its own notified rate, which can differ from the bank rate you paid.
- Valuation disputes. If customs doubts the invoice value, it can reassess the value the duty is charged on.
IGST is a cash-flow cost, BCD is a real cost
A GST-registered business importing for business use can usually claim the IGST it paid at import as input tax credit, subject to GST rules. That makes IGST a working-capital cost rather than a margin cost. BCD and SWS don't come back, so they belong in your landed cost.
Where to get the rate for your product
The rate sits in the Customs Tariff against the 8-digit tariff item, and exemption notifications can change it. Your customs house agent will confirm the rate when filing the Bill of Entry. To check before you order, find the HSN code first, then look up the current rate and any conditions. TradeEdge AI automates that lookup and shows the source for every rate, and says so when a rate isn't verified.
This guide is general information, not legal, customs or tax advice. Rules, rates and notifications change, and the right answer depends on your product, so confirm the current position with your customs house agent or the relevant authority before acting.