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If you’re importing goods into India, you have to calculate your custom duties correctly, file properly, and stay updated. A small mistake can hold up your shipment, increase your costs, or lead to penalties.
Many importers struggle with figuring out how much duty to pay, which documents are needed, and whether their goods qualify for any exemptions.
With new changes announced in 2025, including updated duty rates and stricter rules around proof of origin, things have become even more complicated.
This blog breaks it down for you.
We’ll cover:
• The basics of customs and import duties in simple terms
• How duties are calculated
• Where and how you can file them with less hassle
Customs duty, also known as import duty, is a tax imposed on goods brought into India from other countries. It is calculated on the value of the imported goods and collected at the time of entry into the country. This duty is enforced by Indian Customs under the Customs Act, 1962.
Purpose Of Import Duties:
• To protect local businesses: Higher duties on foreign goods make Indian-made products more competitive.
• To raise government revenue: Customs duties are a major source of income for the government.
• To manage trade: Duties can be adjusted to encourage or discourage imports of certain products.
• To ensure compliance and safety: They help regulate the quality and type of goods entering the country.
Import tariffs are also used in international trade disputes or to respond to unfair practices by other countries, but that falls under geopolitics, which we won’t explore here.
We have covered all the major 2025 custom duty updates in this blog and provided an analysis of the pros and cons of these changes.
You can download the complete custom duties chart from here.
Customs duties are different kinds of taxes that apply when goods are brought into India from other countries. Each type has a specific purpose. Here's a clear breakdown:
This is the main tax on imported goods. It’s calculated as a percentage of the total value of the goods, including the cost, insurance, and shipping. The rate depends on what the product is and where it’s coming from. As of the 2025–26 Budget, India has reduced the number of tax slabs to make this easier to apply.
CVD is added when the imported goods get unfair support (like subsidies) from their home country. It helps ensure Indian companies can compete fairly. Most of this duty is now included under GST, but it can still apply to some items that don’t fall under GST.
This was a 4% duty added earlier to make up for local taxes like VAT. It’s mostly not used now because GST replaced those taxes. However, it may still be charged on certain goods or in special cases.
When products are imported at very low prices that hurt Indian businesses, this duty is used to level the playing field. The government checks if dumping is happening and adds a duty based on how much lower the price is compared to fair value.
This is a short-term duty used when there's a sudden increase in imports of a product that could hurt Indian industries. It gives local businesses time to adjust. It's different from anti-dumping because it’s about the quantity, not unfair pricing.
Used to support Indian industries that are just starting or are struggling to compete with foreign products. The government applies this duty based on advice from the Tariff Commission.
Just like goods bought between states in India, imports also attract GST — called Integrated GST (IGST). It’s added on top of the customs duties and can be claimed as input tax credit (ITC) by businesses.
This is an extra charge (usually 10%) added to the basic customs duty. The money collected goes to fund education, healthcare, and other welfare programs. It doesn’t apply to GST and can’t be claimed as credit.
Customs duty is calculated on the Assessable Value (AV) of the imported goods, which is the total of:
• Cost of the goods (FOB – Free on Board)
• Freight charges (actual or 20% of FOB, whichever is applicable)
• Insurance (actual or 1.125% of FOB if not known)
Formula:
Assessable Value = FOB + Freight + Insurance
Example:
• FOB (Cost of Goods): ₹1,00,000
• Freight: ₹20,000
• Insurance: ₹1,125
• Assessable Value = ₹1,21,125
Determine the HSN (Harmonized System of Nomenclature) code for your goods. This will help identify:
• Applicable Basic Customs Duty (BCD)
• Any Preferential rates under FTAs (Free Trade Agreements)
• Applicable Anti-dumping, Safeguard, or Countervailing duties
Refer to the Customs Tariff Schedule of India to confirm the applicable rates.
BCD is applied as a percentage of the Assessable Value.
Formula:
BCD = (Applicable rate) × Assessable Value
Example (assuming 10% BCD):
BCD = 10% of ₹1,21,125 = ₹12,112.50
SWS is 10% of BCD (unless exempt).
Formula:
SWS = 10% of BCD
Example:
SWS = 10% of ₹12,112.50 = ₹1,211.25
IGST is charged on the total of:
• Assessable Value
• BCD
• SWS
Formula:
IGST = IGST rate × (AV + BCD + SWS)
Assuming IGST rate is 18%:
IGST = 18% of (₹1,21,125 + ₹12,112.50 + ₹1,211.25)
IGST = 18% of ₹1,34,448.75 = ₹24,200.78
These may include:
• Countervailing Duty (CVD): Replaced by IGST, but still relevant for some items
• Anti-Dumping Duty (ADD): Applied to specific goods from specific countries, fixed per unit or ad valorem
• Safeguard Duty: Applied to protect domestic industries
• Agriculture Infrastructure and Development Cess (AIDC): Applied on some items like crude, gold, etc.
• Special Additional Duty (SAD): Abolished on most items but still applicable in rare cases
Example:
Assume anti-dumping duty = ₹5,000
Then, Total Duties = BCD + SWS + IGST + ADD
= ₹12,112.50 + ₹1,211.25 + ₹24,200.78 + ₹5,000
= ₹42,524.53
Check for any exemptions under:
• Customs Exemption Notifications
• Free Trade Agreements (e.g., India–ASEAN, India–Japan)
• Project Imports, EOUs, SEZs
• Government-specified critical sectors like defence, healthcare, agriculture
If eligible, you can reduce or eliminate one or more components of the customs duty.
Example:
If there's a 50% BCD exemption:
Revised BCD = ₹12,112.50 × 50% = ₹6,056.25
Recalculate SWS and IGST accordingly
Final Calculation:
Here's a general format for calculating total customs duty payable:
You can settle your import duties digitally in just a few steps:
• Head to the official ICEGATE payment page.
• Sign in using your ICEGATE username or provide your IEC (Import Export Code).
• Select the customs duty payment section.
• A list of unpaid duty challans will appear, review and pick the one you wish to clear.
• Choose your bank to continue and proceed to the payment gateway.
• Complete the transaction using your bank’s portal.
• Once you’re done, you’ll be sent back to ICEGATE automatically.
• Save or print the payment confirmation for your records.
Not always. Some items are exempt or qualify for lower rates under Free Trade Agreements or government schemes. But you still have to file proper documentation to claim these benefits.
You can search the CBIC’s Customs Tariff or consult a licensed customs broker. Using the wrong code can result in incorrect duties or legal trouble.
You can now voluntarily pay the shortfall with interest before an audit begins. This helps avoid penalties.
Yes, businesses registered under GST can claim IGST on imports as Input Tax Credit, as long as the goods are used for business purposes.
Your concessional duty claim can be denied, and you may have to pay the full duty with penalties. With 2025 changes, customs can ask for more than just a Certificate of Origin.
Use the ICEGATE portal. Log in with your IEC or username, select the challan, and pay through your bank account. Save the confirmation for your records.
Yes. If documentation is incomplete, valuation seems incorrect, or there’s doubt over the origin or classification of goods, shipments can be held up.
It’s an extra charge (usually 10% of BCD) used to fund government welfare schemes. It doesn’t apply on all items, and some tariff lines are now exempt as per 2025 rules.
Follow official notifications from the CBIC website and subscribe to trade alerts. Your freight forwarder or customs broker can also keep you updated.
If you’re dealing with frequent or high-value imports, it’s worth working with a customs broker. They can help you classify goods correctly, apply for exemptions, and avoid compliance issues.
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