Importing to India? Know These Customs Duty Rules First

Are you planning to import goods into India but unsure how customs duties work? Before you start shipping products from overseas, you need to understand the customs duty rules in India. These rules determine how much tax you will pay and how smoothly your goods will pass through Indian ports.

Without knowing this, your products may face delays or high fees. This blog explains customs duties, why they are charged, the types of duties you may face, how they benefit Indian businesses, and how to calculate them.

Growth of the Import Business in India

India’s import sector has grown quickly over the last ten years. With more people purchasing goods from other countries, importing has become a regular part of many companies’ daily operations. From electronics and vehicles to chemicals and raw materials, thousands of items are brought into India each day. This growth comes from online shopping, global supply chains, and local companies needing parts from abroad.

The Indian government is also working hard to simplify the import process. Digital platforms, faster clearance systems, and trade agreements with other countries have helped to import more goods at better costs. At the same time, the government maintains a focus on protecting local industries by applying customs duties on imported items.

What Are Custom Duties?

Customs duties are the taxes levied by the Indian government under the Customs Act, 1962 and the Customs Tariff Act, 1975, explaining how much one has to pay and when. Each time you bring something into the country, these charges are levied on the worth of the object. The worth is not just the selling cost but the entire CIF value (Cost, Insurance, and Freight).

These are not a single flat rate. You may be paying Basic Customs Duty (BCD), Integrated Goods and Services Tax (IGST), Social Welfare Surcharge, and anti-dumping, safeguard, or countervailing duties. Each type is added individually to the total value of the item.

Purpose of Customs Duties

1. Raise Revenue: Customs duty helps the government earn money that is later used for public services, roads, education, and more.
2. Protect Domestic Industries: High duties on certain imported goods make them costlier, giving Indian manufacturers a fair chance to compete.
3. Control Unfair Trade: Duties like anti-dumping are used when foreign goods are sold below cost. These stop overseas companies from harming Indian businesses with unfair pricing.

Types of Import Duties in India

There are several types of duties you can be charged with to import goods in India. Here is the list:

1. Basic Customs Duty (BCD)

Basic Customs Duty is the total import duty, as it is charged on the CIF value of goods. The price usually varies depending on what product you are importing and where you are importing from. Some basic items may be charged at a lower rate, while some luxury goods may be charged at a higher rate, up to 150%.

2. Social Welfare Surcharge (SWS)

This is applied to the Basic Custom Duty(BCD) amount, typically 10%. The revenues are utilised for societal purposes such as education and healthcare.

3. Integrated Goods and Services Tax (IGST)

This is equivalent to the normal GST but levied on imported items. This is determined by adding the SWS and the BCD to the CIF value. The amount may be 5%, 12%, 18%, or 28%, based on the item.

4. Anti-Dumping Duty

This special duty is imposed when a product is imported at an undervalued rate. This protects the domestic market from unfair foreign prices.

5. Safeguard Duty

Imposed when an import surges drastically and damages domestic industries. This provides time for domestic producers to adapt.

6. Countervailing Duty (CVD)

Imposed to offset the foreign government subsidy on products that are exported. This ensures the playing field remains level.

7. GST Compensation Cess

An accessory to products such as tobacco, automobiles, or high-value goods. This additional tax assists the government in recovering losses incurred under GST.

Custom Duty Rates

Particulars	From	To
Mobile phone and chargers	20%	Reduced to 15%
Gold and Silver	15%	Reduced to 6%
Platinum	15.40%	Reduced to 6.4%
PVC flex banners	105	25%

How to Calculate Customs Duty in India

Let’s go over how to calculate customs duty using a step-by-step method:

Most customs duties are assessed on the value of goods. This is usually determined by the customs assessment method prescribed in the Customs Valuation Rules of 2007. In case of doubts and inaccuracies regarding the value of goods, the following techniques are used to  determine the value of goods:

• Rules 4 and 5: The comparative value method assesses the value of identical or similar goods.
• Rule 7: The deductive value method, which uses the value of the goods when sold in the country where it is imported.
• Rule 8: The computed value method uses material, fabrication costs, and profit of the product in the country of origin.
• Rule 9: The fallback method, which is a combination of prior methods, adds more flexibility.

In real-world cases, you may also need to include AIDC, Anti-Dumping Duty, or other relevant factors.

For large shipments or unusual products, it is smart to consult a customs broker or use official tools like the Indian Customs EDI Gateway or the ICEGATE portal to get exact numbers.

Final Thoughts

You need to be aware of customs duties when importing Indian products. They are a combination of duties such as BCD, IGST, SWS, etc. Customs duties protect the Indian industry, enable the government to raise revenue, and help create a free trade environment. With continuous updates, customs duties also help Indian businesses to become more effective and powerful in terms of cost.