Duty & taxes
How import duty from China is actually calculated
Duty is not a percentage of your invoice. It is charged on goods plus freight plus insurance, then compounded by a surcharge and IGST. Here is the arithmetic, worked through.
The formula
Four calculations, in this order
1. Assessable value
Goods value plus freight plus insurance, converted to rupees at the customs exchange rate. This is the base for everything that follows. Note what it means in practice: your freight is taxed. Air freight therefore raises your duty as well as your shipping bill.
2. Basic customs duty
A percentage of assessable value, set by HS code. Most consumer categories fall between 5 and 20 percent, but some — toys are the well-known example — sit far higher. This is a permanent cost. It does not come back.
3. Social welfare surcharge
Ten percent of the basic customs duty. Not ten percent of the goods — ten percent of the duty. On a 20 percent BCD it adds an effective 2 percent.
4. IGST
Charged on assessable value plus BCD plus surcharge. It is usually the largest single line on the bill — and it is the one you get back, as input tax credit, if you are GST registered. Treat it as a cash-flow cost, not a real one.
And sometimes
- Compensation cess on a narrow set of goods
- Anti-dumping duty on specific products of specific origin — several categories from China carry it, and it can exceed the basic duty
- Countervailing or safeguard duty where a measure is in force
Illustrative, at an assumed 88.00 exchange rate. Your figures will differ.
By category
Indicative rates for common Hyderabad imports
| Category | HS chapter | BCD (indicative) | IGST | Watch for |
|---|---|---|---|---|
| Mobile & electronic accessories | 85 | 15–20% | 18% | BIS registration; WPC for wireless |
| Audio devices, earphones | 8518 | 15–20% | 18% | BIS; WPC for Bluetooth |
| LED lighting | 9405 | 20% | 12–18% | BIS registration |
| Hand tools & hardware | 8205 | 7.5–10% | 18% | Anti-dumping on some items |
| Imitation jewellery | 7117 | 20% | 3% | Valuation scrutiny |
| Furniture | 9403 | 20–25% | 18% | Volume-heavy — freight dominates |
| Toys | 9503 | High — verify | 12% | Quality control order; sample testing |
| Machinery & parts | 84 | 7.5% | 18% | End-use conditions on some lines |
| Plastic goods | 39 | 10–15% | 18% | EPR registration |
| Textiles & made-ups | 63 | 10–20% | 5–12% | Specific-rate minimums apply |
The trap
Under-declaring costs more than it saves
Customs holds reference data on what goods in each HS code actually sell for. An invoice priced well below that range does not slip through — it triggers a valuation query. The consignment sits at the CFS accruing demurrage, gets reassessed at the higher value anyway, and a penalty can follow.
We file what the goods cost. It is the only version that survives contact with an assessing officer.
Questions
About duty and taxes
How is import duty calculated in India?
Duty is charged on the assessable value, which is goods value plus freight plus insurance — not on your invoice alone. Basic customs duty is a percentage of that. A social welfare surcharge of 10 percent of the BCD is added. IGST is then charged on assessable value plus BCD plus surcharge. Some goods also attract compensation cess or anti-dumping duty.
Why is duty charged on my freight?
Because Indian customs assesses on a CIF basis — cost, insurance and freight. It is the international norm. The practical consequence is that expensive air freight raises your duty as well as your freight bill, which is why air is more costly than the freight quote alone suggests.
Can I get the duty back?
IGST comes back as input tax credit if you are GST registered. Basic customs duty and the social welfare surcharge do not come back — they are a permanent cost that has to sit in your selling price. Anyone telling you otherwise is describing a drawback scheme that applies to re-export, not domestic sale.
What is anti-dumping duty?
An additional duty imposed on specific goods from specific countries where India has found them to be sold below fair value. Several categories from China carry it, and it can be substantial — sometimes larger than the basic duty. It is levied on the HS code and the origin, so it is checked at the enquiry stage.
What happens if I declare a lower value to reduce duty?
Customs assesses declared value against its own reference data. A price well below the norm triggers a valuation query, which means delay, demurrage and potentially a penalty and a re-assessment at the higher value. It is also a false declaration. We will not file one.
How do I find my HS code?
Send us the product and we will identify it. The code is not a formality — it sets your duty rate and it determines whether a certification such as BIS or WPC is required before customs will release the goods.
Get started
Get the exact rate for your product
Send the product or the HS code. We confirm the current BCD, IGST, any anti-dumping measure and any certification the category needs — usually within two hours.