India Customs Duty Complete Guide: BCD, IGST, Social Welfare Surcharge Explained

India's customs duty structure can confuse first-time importers because the headline rate is rarely the final rate. Multiple levies stack on top of the assessable value, and exemptions, notifications and Free Trade Agreements (FTAs) can dramatically change the final landed cost. This guide breaks down every component, in the order you encounter them.

What is customs duty in India?

Customs duty is the indirect tax imposed on goods entering (or leaving) India. The Central Board of Indirect Taxes and Customs (CBIC) administers it under the Customs Act, 1962 and the Customs Tariff Act, 1975. For imports, duty is charged on the transaction value (CIF) declared to customs, also called the assessable value.

Components of India's import duty

A typical import consignment attracts:

• **Basic Customs Duty (BCD)** — the headline rate, ranging from 0% to 150% by HS code.
• **Social Welfare Surcharge (SWS)** — 10% of total BCD (post-2018, replacing the earlier CESS).
• **Integrated GST (IGST)** — the GST applied on imports, equal to the GST slab of the goods.
• **GST Compensation Cess** — only on specific items (tobacco, aerated drinks, coal, etc.).
• **Anti-dumping duty (ADD)** — where applicable on specific origins.
• **Safeguard duty** — temporary, on surging imports of sensitive goods.
• **Countervailing duty (CVD)** — against subsidised imports.

How customs assessable value is computed

The assessable value (AV) is calculated on CIF:

``` AV = (FOB value + Freight + Insurance) converted to INR at CBIC exchange rate `` For air shipments, freight is the airway bill charge. For sea shipments, the bill of lading freight. Insurance is usually 1–2% of FOB if not declared separately.

How BCD is calculated

BCD = BCD rate × Assessable Value. The rate depends on the HS code (8-digit ITC(HS)). For example, basmati rice may attract 0% (for export-grade), while certain pulses may attract 0% or 60% depending on the variety and policy at the time.

How SWS is calculated

SWS = 10% × BCD. SWS is charged on the BCD itself, not on the assessable value.

How IGST on imports is calculated

IGST = IGST rate × (Assessable Value + BCD + SWS). This means IGST is computed on the duty-paid value, not just the CIF value. This stacking often catches new importers by surprise.

> Always compute landed cost on (CIF + BCD + SWS + IGST + clearing charges), not just CIF × headline rate.

Worked example

Suppose a consignment has:

• CIF value: INR 10,00,000
• BCD rate: 10%
• IGST rate: 18%

Then:

• BCD = INR 1,00,000
• SWS = 10% of INR 1,00,000 = INR 10,000
• IGST base = 10,00,000 + 1,00,000 + 10,000 = INR 11,10,000
• IGST = 18% of INR 11,10,000 = INR 1,99,800
• Total duty = INR 3,09,800 (about 31% of CIF)

Customs duty exemptions in India

Common exemptions and concessions:

• **Project imports** — reduced rate for capital goods in approved projects.
• **EPCG scheme** — machinery for export production at reduced duty.
• **Advance Authorisation** — duty-free inputs for export production.
• **Deemed exports** — specified supplies treated as exports.
• **FTAs** — reduced or zero BCD on goods originating from FTA partners (Japan, Korea, ASEAN, Australia, UAE).

Free Trade Agreements and preferential duty

India has FTAs with several countries. To claim preferential duty:

• The supplier must issue a Certificate of Origin (CoO) in the prescribed form.
• The importer must declare the FTA claim at the time of filing the bill of entry.
• The goods must satisfy the Rules of Origin (ROO) criteria.

> Without a valid CoO, preferential duty is denied even if the goods genuinely originate from the FTA partner.

Anti-dumping duty in India

ADD is imposed on specific goods from specific countries to protect domestic industry. It is country- and supplier-specific and changes periodically. Examples historically include chemicals, fabrics and steel products. Always check the latest DGTR notification before importing sensitive categories.

How to find the correct duty rate

• Look up the 8-digit ITC(HS) code in the Customs Tariff Act.
• Cross-check on the ICEGATE portal.
• Refer to the latest CBIC notifications for any changes or exemptions.
• Use a CHA or customs consultant for first-time imports of a new HS code.

GST input credit on imported goods

IGST paid on imports is available as input tax credit (ITC) for registered businesses, subject to GST rules. This is why IGST on imports is often a timing issue, not a permanent cost, for GST-registered importers.

Common mistakes

• Quoting the buyer an FOB price without checking destination import duty.
• Assuming IGST = headline GST slab × CIF (wrong — it's × duty-paid value).
• Forgetting SWS in landed-cost calculations.
• Importing without a valid CoO and losing FTA benefit.
• Misclassifying the HS code to claim a lower rate — this is a serious offence under the Customs Act.

FAQ

**Q: Is IGST on imports refundable?** A: IGST on imports is claimable as input tax credit if you are GST-registered and the goods are used for taxable supplies. Refund of accumulated ITC is possible in limited cases.

**Q: What is the difference between BCD and IGST?** A: BCD is a customs duty (cost to importer). IGST is the GST applied on imports, claimable as ITC by registered businesses.

**Q: How can I check the duty rate for my product?** A: Identify the 8-digit ITC(HS) code, then check the Customs Tariff Act and the ICEGATE portal. A CHA can confirm for your specific shipment.

**Q: Does India impose customs duty on exports?** A: Most exports are zero-rated. A few products (e.g., certain ores, hides) attract export duty. Always verify before shipping.

Key Takeaways

• India's import duty stack = BCD + SWS (10% of BCD) + IGST (on duty-paid value) + cess/ADD where applicable.
• Always compute landed cost on the duty-paid value, not CIF.
• FTAs and CoO can dramatically reduce BCD — claim them properly.
• IGST on imports is creditable for GST-registered businesses.
• Misclassification of HS code is a serious offence — verify before filing.

Blueroute Exim (Surat, Gujarat) helps global buyers navigate India-side documentation and compliance. For specific duty rates and classification, we coordinate with licensed CHAs and customs consultants.