01The parts of the duty
Most imports pay several layers. Each is a separate line on the bill of entry.
- Basic Customs Duty (BCD): the main duty, set in the First Schedule of the Customs Tariff Act, often reduced by an exemption notification.
- Social Welfare Surcharge (SWS): charged on the amount of customs duty, normally 10% of BCD; some goods are exempt.
- Agriculture Infrastructure and Development Cess (AIDC): applies to some goods, usually in place of part of the BCD.
- IGST: charged on the assessable value plus BCD, SWS and any other customs duties, at the GST rate of the goods. GST-registered businesses can take it as input tax credit.
- Compensation cess: only on a few goods such as some tobacco products and vehicles.
- Anti-dumping, safeguard or countervailing duty: extra duty on specific goods from specific countries.
02Assessable value
Duty is charged on the transaction value of the goods, delivered to the Indian port — in practice the CIF value (cost, insurance and freight). If you buy FOB, add the actual freight and insurance. Foreign currency is converted at the exchange rate notified by CBIC for imports on the date of filing the bill of entry.
03Reading the CBIC tariff
Find your 8-digit tariff item in the Customs Tariff on the CBIC site (ICEGATE also offers a tariff lookup). The tariff shows the standard BCD rate. Then check the exemption notifications that apply to that item — the effective rate is often lower. For preferential rates under a trade agreement, look up the FTA notification for the country of origin. Your customs broker’s software does this too, but check the result yourself on the first shipment.
04Worked example (made-up figures)
EXAMPLE ONLY — the value and rates below are invented to show the method. Suppose the assessable (CIF) value is ₹1,00,000, the BCD rate is 10%, SWS is 10% of BCD and IGST is 18%. BCD = ₹10,000. SWS = 10% of ₹10,000 = ₹1,000. Value for IGST = ₹1,00,000 + ₹10,000 + ₹1,000 = ₹1,11,000. IGST = 18% of ₹1,11,000 = ₹19,980. Total paid at Customs = ₹10,000 + ₹1,000 + ₹19,980 = ₹30,980. Of this, the ₹19,980 IGST comes back as input tax credit if you are GST-registered, so the real cost is ₹11,000. Look up the actual rates for your HS code on CBIC before you price anything.
05Common mistakes
Wrong classification is the biggest one: a similar-looking HS code can carry a very different rate, or a licence condition. Under-valuing the invoice is treated as evasion. Claiming an FTA rate without proper origin proof leads to the preference being denied (see the duty-free imports guide). If you are unsure of the code, you can seek an advance ruling from CBIC’s Customs Authority for Advance Rulings.