How import duty is actually calculated in India
The order matters, because each duty is charged on a base that includes the ones before it. Getting the sequence wrong is the most common mistake in a spreadsheet.
- Assessable value = FOB invoice value + freight + insurance. This is the CIF value converted at the customs exchange rate, not your bank's rate.
- Basic customs duty (BCD) = assessable value × BCD rate. Set by HS code.
- Social welfare surcharge (SWS) = 10% of the BCD — not of the goods value. A common error is applying it to the assessable value, which overstates it tenfold.
- IGST = (assessable value + BCD + SWS) × IGST rate. So you pay GST on the duty, not just on the goods.
- Compensation cess, where it applies, on the same base as IGST.
Since the GST restructure, the slabs are 0%, 5%, 18% and 40%. The old 12% and 28% rates are gone — if you are working from an older spreadsheet or an out-of-date calculator, it is wrong.
The distinction that changes your pricing
Not all of what you pay at customs is a cost.
BCD, SWS and compensation cess are sunk. You never see that money again. It becomes part of your cost of goods and it has to be recovered in your selling price.
IGST is not. If you are GST registered and importing for business use, the IGST you pay at customs is available as input tax credit — you set it off against the GST you collect on your sales. It is a cash flow event, not a cost.
This matters in two directions. If you price your goods off the total customs payment, you will overprice and lose deals. If you plan your cash flow off the true cost, you will be short at clearance. This tool gives you both numbers, deliberately.
If you are not GST registered, none of that applies — IGST is a real, unrecoverable cost, which is why the tool asks.
Free trade agreements are the biggest lever you have
India has trade agreements that reduce or eliminate BCD on qualifying goods from a number of countries — the UAE, ASEAN members, Japan, South Korea, Australia, Sri Lanka and others. On a shipment with 20% BCD, a preferential rate is not a rounding error; it can be the difference between a viable import and a dead one.
The catch is that a preferential rate is not automatic. You need a certificate of origin from the exporter in the correct format, and under the CAROTAR rules the importer carries the burden of proving the goods genuinely originate there. Customs can and does ask. Ask your supplier for the certificate before the goods ship — retrofitting one afterwards is difficult and sometimes impossible.
The charges that surprise first-time importers
- CFS handling and ground rent — containers move to a container freight station for examination, and it is charged by the day.
- Customs examination charges — if your consignment is picked for inspection, which first-time importers frequently are.
- Detention and demurrage — the clock starts when the vessel arrives, not when you get around to clearing.
- Bond and bank guarantee costs — for provisional assessments or certain schemes.
- Anti-dumping duty — levied on specific goods from specific countries, most often China. It is separate from BCD, can be very large, and is easy to miss until the bill of entry is filed.