How to Calculate Customs Duty in India in 2026: Assessable Value, BCD, SWS, AIDC and IGST with a Worked Example

Customs duty decides whether an import makes commercial sense, yet many small importers only find out what they owe when their customs broker sends the bill of entry. The calculation itself isn't hard once you know the order: value the goods the way customs does, apply the tariff rates for your HS code, add the surcharge and IGST, and separate what you can claim back from what is a real cost. This guide shows how to calculate customs duty in India in 2026, the valuation rules that changed (no more 1% landing charge, no more compensation cess), and a worked example in rupees.

Quick answer

Assessable value = CIF value (cost + insurance + freight to the Indian port) × CBIC's customs exchange rate. Then BCD (and AIDC where the tariff has it) at the rate for your HS code, SWS at 10% of the aggregate customs duties where not exempt, and IGST on assessable value + BCD + AIDC + SWS. Add them for the total. If you're GST-registered, the IGST comes back as input tax credit.

• No 1% landing charge since September 2017 — value is CIF only

• Freight unknown? Customs adds 20% of FOB value; insurance unknown? 1.125% of FOB value

• GST compensation cess ended from 1 February 2026 — don't add it

• Rates are per HS code — look up yours on ICEGATE's duty calculator before you order

The parts of customs duty on an import

Indian import duty isn't a single tax. A typical bill of entry shows four or five lines, each with its own legal base:

Two older levies no longer appear. Education cess and secondary and higher education cess on imports were replaced by SWS in 2018. GST compensation cess, which applied to cars, tobacco, aerated drinks and coal, was discontinued from 1 February 2026 — for most goods it had already stopped with GST 2.0 in September 2025.

Step 1: Find the assessable value

Customs duty is charged on the assessable value, worked out under section 14 of the Customs Act and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The starting point is the transaction value — the price actually paid or payable to the seller — adjusted so that it represents the goods delivered to the Indian port or airport of import.

Add freight and insurance to the place of importation. If you buy FOB (free on board) or EXW (ex-works), you add the actual freight and insurance to get CIF. If you buy CIF or CFR, the seller has already included freight (and insurance, under CIF). Rule 10(2), as amended by Notification 91/2017-Customs (N.T.) from 26 September 2017, also sets fallbacks:

• If the freight cost can't be established, customs takes it as 20% of FOB value.
• If the insurance cost can't be established, it's taken as 1.125% of FOB value.
• For goods imported by air, freight added to value can't exceed 20% of FOB, even if you actually paid more.
• Costs of transshipping the goods to another customs station within India are excluded.

No landing charges. Until 2017, customs added a notional 1% of CIF for "landing charges" (unloading and handling at the port). The Supreme Court held the notional addition unsustainable, and the 2017 amendment stopped it. Many online calculators still add 1%, overstating your duty slightly.

Other additions. Rule 10(1) adds certain costs that aren't in the invoice: commissions and brokerage paid by you (other than buying commission), packing costs, royalties and licence fees related to the goods that are a condition of sale, the value of moulds, tools or materials you supplied free to the seller, and any part of resale proceeds that goes back to the seller. If you and the seller are related — a parent company, for example — customs may examine whether the price was influenced by the relationship.

Convert to rupees at the customs rate. The value is converted at the import exchange rate notified by CBIC that is in force on the date the bill of entry is filed. It isn't your bank's rate or the RBI reference rate, so use the notified rate in your estimate.

Step 2: Classify the goods and find the rates

Every rate depends on the eight-digit tariff item (Indian Trade Classification based on the HS code). The First Schedule to the Customs Tariff Act gives the standard BCD rate; exemption notifications under section 25 often lower it for specific goods or end-uses, and the effective rate is what you pay. The tariff also gives the IGST rate for imports, which follows the GST schedule — after GST 2.0, most goods fall at 5% or 18%, with 40% for a short list of sin and luxury goods.

Classification is where most disputes begin. A product's description on the supplier's invoice isn't enough; customs classifies by the General Rules of Interpretation and the chapter and section notes. If you're unsure, check how similar goods have been classified, use the HS code your supplier's country uses as a guide only, and consider a customs advance ruling for a large or repeat import. Our HSN code guide explains how the codes are structured.

Where the duty rate for your goods comes from

Source	What it sets	Where to check
Customs Tariff Act, First Schedule	Standard BCD and the IGST rate for each tariff item	ICEGATE duty calculator / CBIC tariff
Section 25 exemption notifications	Lower effective BCD, AIDC or SWS for named goods or end-uses	Notification number shown against the tariff item
Trade agreement notifications	Preferential BCD for goods of qualifying origin	FTA notification + certificate of origin
Anti-dumping / safeguard notifications	Extra duty on named goods from named countries or producers	Notified by the Finance Ministry; shown in the calculator

Customs Tariff Act, First Schedule

What it sets

Standard BCD and the IGST rate for each tariff item

Where to check

ICEGATE duty calculator / CBIC tariff

Section 25 exemption notifications

What it sets

Lower effective BCD, AIDC or SWS for named goods or end-uses

Where to check

Notification number shown against the tariff item

Trade agreement notifications

What it sets

Preferential BCD for goods of qualifying origin

Where to check

FTA notification + certificate of origin

Anti-dumping / safeguard notifications

What it sets

Extra duty on named goods from named countries or producers

Where to check

Notified by the Finance Ministry; shown in the calculator

The rate structure itself was overhauled in Budget 2025-26. Seven more tariff rates for industrial goods were removed, leaving eight rates including zero; the 100%, 125% and 150% slabs were merged into 70%; and several 25%–40% slabs were brought down to 20%. To keep the overall incidence roughly the same, the government shifted part of the duty on many items into AIDC, and since only one cess or surcharge was to apply, SWS was exempted on 82 tariff lines that carry a cess. Budget 2026-27 continued the clean-up by moving many concessional rates from notifications into the tariff itself from 1 May 2026, keeping effective rates unchanged. The practical point: a rate you looked up in 2024 may now be split differently between BCD and AIDC, so check the current tariff rather than an old quote.

Preferential rates under trade agreements. If you import from a country with which India has a free trade agreement — ASEAN members, Japan, South Korea, the UAE, Australia and others — BCD may be lower or nil, provided the goods meet the agreement's rules of origin. You claim it in the bill of entry with a certificate of origin, and under the CAROTAR rules you must have the origin information to back the claim if customs asks. SWS and IGST still apply where due.

Step 3: Apply BCD, AIDC and SWS

Once you have the assessable value and the rates:

• BCD = assessable value × effective BCD rate.
• AIDC = assessable value × AIDC rate, if your tariff line has one.
• SWS = 10% of the aggregate customs duties. Under section 110 of the Finance Act 2018, its base is the customs duties levied — BCD and AIDC — but not anti-dumping, safeguard or countervailing duty, and not SWS itself. Where a cess applies and SWS is exempted for that line, SWS is nil.
• Anti-dumping or safeguard duty, if notified for your product and origin, is added separately — often as a fixed amount per tonne or a percentage.

Where BCD is fully exempt (for example under an FTA or an exemption notification), SWS on it is also nil, because 10% of zero is zero.

The customs duty calculation in order

Step 1

Invoice value

transaction value

Step 2

+ freight + insurance

to Indian port; no landing charge

Step 3

× customs exchange rate

CBIC rate on BoE date

Step 4

Assessable value

Step 5

+ BCD + AIDC + SWS

SWS = 10% of the aggregate customs duties

Step 6

+ IGST

on value + all duties

Step 7

Total duty payable

Step 4: Calculate IGST on imports

IGST on imports is levied under section 3(7) of the Customs Tariff Act. Under section 3(8), the value for IGST is the assessable value plus BCD and every other duty of customs charged on the goods, including AIDC, SWS and any anti-dumping or safeguard duty — but not IGST itself. CBIC's guidance note for importers specifically points out that anti-dumping and safeguard duties are part of this base.

IGST = (assessable value + BCD + AIDC + SWS + any anti-dumping/safeguard duty) × IGST rate.

If you're registered under GST and the goods are for your business, the IGST you pay is available as input tax credit. It flows into your GST records from ICEGATE (it appears in GSTR-2B as import of goods data), so match the bill of entry number and date. BCD, AIDC and SWS are not creditable — they add to your landed cost.

Worked example: importing machine parts from Germany

A Udyam-registered engineering unit in Pune imports spare parts from Germany by sea. The figures below use illustrative rates — BCD 10%, SWS 10%, IGST 18%, no AIDC or anti-dumping duty — and an illustrative customs exchange rate of ₹95 per euro. Look up the actual rates for your tariff item and the notified rate for your bill of entry date before relying on them.

So the unit pays about 31% of the assessable value to customs on the day of clearance, but its real cost is about 11% once the IGST credit is used against its own GST output. Cash flow matters: the IGST sits as credit until the unit has output tax to set it off against.

If the parts came from a country with an FTA and qualified for nil BCD, SWS would also be nil, and the unit would pay only IGST of 18% on ₹10,36,688 = ₹1,86,604 — all of it creditable. On regular imports, getting origin right can be worth more than haggling with the supplier.

If the parts came by air with an actual air freight of €2,500, customs would add only €2,000 (20% of FOB) to the value, because of the air freight cap.

Reducing customs duty legally

A few routes cut the cash outflow or the real cost of duty:

• FTA rates — check every supplier country for a trade agreement and whether your goods meet its origin rules.
• Capital goods under EPCG — exporters can import capital goods at zero customs duty against an export obligation; see our EPCG scheme guide.
• Advance authorisation — duty-free import of inputs used to make export products.
• Customs bonded warehousing — store goods without paying duty until you clear them for sale in India.
• Duty drawback — when imported goods or inputs are used in exports, part of the duty can come back.

Each has conditions and paperwork; work out whether the saving outweighs the compliance cost for your volumes.

Landed cost: what customs duty doesn't include

Customs duty is only part of what an import costs you. Your landed cost also includes the port or airport terminal's handling charges, container freight station or ICD charges, shipping line delivery-order fees, detention if containers are held too long, your customs broker's fee, inland transport to your factory, and any testing or certification. None of these goes into the assessable value, because the valuation rules stop at the place of importation, but every one of them is real money. Most of these are services that carry GST, and as a registered business you can usually take credit for that GST too, so compare them net of credit.

A useful habit is to build a landed-cost sheet for every new product: invoice value, freight, insurance, assessable value, each duty line, the creditable and non-creditable parts, the port and broker charges, and transport. Divide the non-creditable total by the quantity and you have a cost per unit you can compare with a domestic supplier's price. Many small importers discover that a cheaper overseas price disappears once BCD, SWS and port charges are added — and some find the opposite, especially where an FTA removes BCD.

Filing the bill of entry and paying the duty

You (or your customs broker) declare the goods in a bill of entry on ICEGATE, using your IEC. Since the 2021 amendment to section 46 of the Customs Act, the bill of entry has to be filed in advance — by the end of the day before the vessel arrives (sea and ICD imports); by the end of the arrival day for air, land and imports from Bangladesh, Maldives, Myanmar, Pakistan and Sri Lanka by sea. You can file it up to 30 days before expected arrival. Late filing attracts late-presentation charges unless the officer accepts your reason for the delay, so give your broker the documents early.

From order to out-of-charge

1. 1

   Confirm classification and rates

   Agree the eight-digit tariff item with your broker and check BCD, AIDC, SWS, IGST, any anti-dumping duty and any import restriction on ICEGATE's duty calculator.

   ICEGATE
2. 2

   Collect the documents

   Commercial invoice, packing list, bill of lading or airway bill, insurance certificate, certificate of origin (for FTA claims) and any product-specific licence or certificate.

3. 3

   File the bill of entry in time

   Your broker files on ICEGATE before the deadline. The system self-assesses the duty; customs may reassess or ask for examination.

4. 4

   Pay the duty online

   Pay through ICEGATE e-payment. Delay in paying assessed duty attracts interest, so keep funds ready before the goods land.

5. 5

   Get the goods released

   After payment and any examination, customs gives out-of-charge and you clear the goods from the port, ICD or air cargo terminal.

Read our export documentation guide for how the same documents work on the export side, and the import–export business guide for licences you may need before importing.

When customs disagrees with your calculation

The bill of entry is self-assessed: you declare the value, classification and rates, and the system calculates the duty. Customs can still reassess — it may question the value if it looks low compared with similar imports, change the classification, deny an exemption or FTA claim, or ask for the goods to be examined. If you don't agree with a reassessment, ask for a speaking order setting out the reasons, and you can then appeal to the Commissioner (Appeals). Where the value or classification needs more checking, customs can allow provisional assessment, releasing the goods against a bond and security while the final duty is decided.

If you import from a related company, expect extra scrutiny of the price, and keep transfer-pricing and cost documents ready. Whatever happens, keep the supplier's invoice, contract, payment proof and freight bills together: they are your evidence that the declared value is the real price paid.

Common mistakes in customs duty calculation

Official links

Official customs links

• ICEGATE — Indian Customs Electronic GatewayBill of entry, e-payment, duty calculator, exchange rates
• ICEGATE duty calculatorDuty by tariff item and origin
• CBIC guidance note on GST for importers (PDF)IGST base on imports
• Customs public notice on bill of entry timing (PDF)Section 46 advance filing

What to do next

Before placing an import order, look up your tariff item on ICEGATE, estimate the landed cost with the steps above, and check whether an FTA rate or EPCG can lower it. Use our currency converter to sense-check the euro or dollar value, and our GST calculator to work out IGST on your selling price. If you're new to importing, start with the IEC registration guide.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the formula for customs duty in India?

Start with the assessable value: the CIF value (cost, insurance and freight to the Indian port) converted at the CBIC customs exchange rate. Add basic customs duty (BCD) and any AIDC at the tariff rate, then social welfare surcharge at 10% of the aggregate customs duties where it applies. IGST is charged on the assessable value plus all those duties. Total duty is BCD + AIDC + SWS + IGST.

Are landing charges still added to the assessable value?

No. The old 1% notional addition for landing charges was removed by Notification 91/2017-Customs (N.T.) from 26 September 2017. Assessable value is now based on cost, insurance and freight up to the place of importation. Where freight or insurance can't be established, customs adds 20% of FOB value and 1.125% of FOB value respectively.

Is IGST on imports a cost for my business?

Usually not, if you are GST-registered and use the goods for business. The IGST paid on the bill of entry is available as input tax credit and shows up through ICEGATE data in your GST records. Basic customs duty, AIDC and social welfare surcharge are not creditable, so they are the real cost of importing.

Is compensation cess still charged on imports?

No. GST compensation cess was discontinued with effect from 1 February 2026. Most goods had already stopped attracting it in September 2025, and tobacco and pan masala moved to central excise duty and a separate cess. Older import calculators that still add compensation cess are out of date.

Which exchange rate does customs use?

Customs uses the import exchange rate notified by CBIC, not your bank's rate. The rate in force on the date the bill of entry is filed applies. CBIC publishes the rates by notification, usually twice a month, and ICEGATE shows the current rates.

Where can I check the customs duty for my HS code?

Use the duty calculator on ICEGATE or the CBIC customs tariff. Enter the eight-digit tariff item and country of origin to see BCD, AIDC, SWS and IGST, along with exemption notifications and any anti-dumping duty. A customs broker can confirm the classification before you place the order.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 11 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Guidance Note for Importers and Exporters (GST on imports) — Central Board of Indirect Taxes and Customs · accessed 11 October 2026
2. 2.Amendments in Customs Valuation Rules for imports — Notification 91/2017-Customs (N.T.) dated 26.09.2017 — Council for Leather Exports (circular reproducing the CBIC notification) · accessed 11 October 2026
3. 3.Public Notice 15/2021 — legislative changes in section 46 of the Customs Act — Commissionerate of Customs, Mangaluru (CBIC) · accessed 11 October 2026
4. 4.ICEGATE — Indian Customs Electronic Gateway — CBIC · accessed 11 October 2026
5. 5.Finance Act 2018, section 110 — Social Welfare Surcharge — TaxManagementIndia (statute text) · accessed 11 October 2026
6. 6.Union Budget 2025-26 — customs tariff rationalisation (seven rates removed, one cess or surcharge) — TaxGuru (summary of the PIB release) · accessed 11 October 2026
7. 7.GST compensation cess discontinued from 1 February 2026 — TaxTMI (summary of Notification 19/2025-Central Tax (Rate)) · accessed 11 October 2026
8. 8.Proposed key customs and central excise changes — Budget 2026-27 — TaxGuru (summary of Budget 2026-27 customs notifications) · accessed 11 October 2026