Import duty in India is not one number but a stack, and each layer is calculated on a different base. Here is the order of operations, with the arithmetic worked through.
Importers are frequently quoted "the duty rate" as a single percentage, then surprised by the final bill. The reason is that Indian import duty is a stack of levies, and each one is computed on a base that includes the levies below it.
Step 1: the assessable value
Everything is calculated on the assessable value, not the invoice value. Assessable value is the CIF value at the Indian port:
Assessable value = FOB + international freight + insurance
Where freight or insurance are not separately evidenced, customs applies notional rates. This is why your incoterm matters to your duty bill, not just your freight bill — an FOB purchase with cheap freight produces a lower assessable value than the same goods bought CIF at a marked-up freight rate.
Step 2: Basic Customs Duty
BCD is applied to the assessable value at the rate for your HS code. Rates commonly run from 0% to 30% depending on the product, with concessional rates available under free trade agreements when a valid Certificate of Origin is presented.
Step 3: Social Welfare Surcharge
SWS is 10% of the BCD amount — not 10% of the goods value. On a 10% BCD, SWS adds 1% of assessable value.
Step 4: IGST
IGST is charged on the total of assessable value plus BCD plus SWS. Rates are 5%, 12%, 18% or 28% depending on the goods.
Crucially, IGST paid at import is available as input tax credit against your output GST, provided the Bill of Entry is in your name and correctly reflects your GSTIN. For a GST-registered business, IGST is a cash-flow cost rather than a real cost — which is a strong argument against DDP terms, where the Bill of Entry may not be in your name.
A worked example
Goods with an assessable value of ₹10,00,000, BCD 10%, IGST 18%:
| Component | Basis | Amount |
|---|---|---|
| Assessable value | CIF | ₹10,00,000 |
| Basic Customs Duty | 10% of AV | ₹1,00,000 |
| Social Welfare Surcharge | 10% of BCD | ₹10,000 |
| Subtotal | ₹11,10,000 | |
| IGST | 18% of subtotal | ₹1,99,800 |
| Total payable | ₹3,09,800 |
Headline BCD was 10%. Total outlay at the port was 31% of assessable value — of which ₹1,99,800 comes back as input credit, leaving ₹1,10,000 as true duty cost.
Levies that may also apply
- Anti-dumping duty — product and country specific, sometimes substantial
- Countervailing duty — against subsidised imports
- Safeguard duty — temporary protection on import surges
- Compensation cess — on a small set of goods such as tobacco and certain vehicles
These are tied to the HS code and the country of origin, which is another reason to confirm classification before ordering rather than after arrival.
Ways to legitimately reduce the bill
- Claim FTA benefit where one applies, with a valid Certificate of Origin at the time of assessment
- Advance Authorisation for inputs that will be re-exported after processing
- EPCG for capital goods against an export obligation
- Project Imports under Heading 9801 for eligible plant and machinery
- Bonded warehousing to defer duty until goods are cleared for home consumption
Want the landed cost modelled before you commit to a purchase order? Send us the product details and HS code and we will work the numbers.
