Customs duties and tariffs are among the most critical factors in international trade. They directly impact the cost of goods, pricing strategy, and overall profitability of your import-export business. This guide breaks down everything you need to know about navigating India's customs framework.

What Are Customs Duties?

Customs duties are taxes imposed by the government on goods when they cross international borders. In India, customs duties are governed by the Customs Act, 1962 and administered by the Central Board of Indirect Taxes and Customs (CBIC).

The primary purposes of customs duties include:

• Revenue generation for the government
• Protecting domestic industries from foreign competition
• Regulating the flow of goods across borders
• Implementing trade agreements and policies

Types of Customs Duties in India

1. Basic Customs Duty (BCD)

This is the primary duty levied on imported goods. Rates vary from 0% to 150% depending on the product category and are specified in the Customs Tariff Act. Most industrial goods attract 5-15% BCD, while luxury and non-essential items attract higher rates.

2. Integrated GST (IGST)

IGST is charged on the value of imported goods inclusive of BCD. The rate is the same as the GST rate applicable to the product within India (5%, 12%, 18%, or 28%). IGST paid on imports can be claimed as input tax credit.

3. Social Welfare Surcharge

A surcharge of 10% is levied on the aggregate of customs duties (excluding IGST) to fund social welfare programs. This replaced the earlier education cess.

4. Anti-Dumping Duty

Imposed on specific products from specific countries when they're being sold below market value (dumped) in India, causing injury to domestic industry. These are determined through investigations by the DGTR.

5. Safeguard Duty

A temporary duty imposed when there's a sudden surge in imports that threatens to cause serious injury to domestic producers. This is a WTO-compliant trade remedy measure.

Understanding HSN Codes

The Harmonized System of Nomenclature (HSN) is a globally standardized system for classifying traded products. Every product is assigned a unique code that determines its applicable duty rate.

• 2-digit: Chapter (e.g., 09 = Coffee, Tea, Spices)
• 4-digit: Heading (e.g., 0902 = Tea)
• 6-digit: Sub-heading (e.g., 090210 = Green Tea)
• 8-digit: India-specific tariff item (e.g., 09021010 = Green Tea in packets)

"Correct HSN classification is the foundation of compliant trade. A wrong code can lead to overpaying duties, customs holds, penalties, or even seizure of goods."

How to Calculate Total Import Cost

Here's a step-by-step calculation for importing goods into India:

1. CIF Value: Cost + Insurance + Freight (the assessable value)
2. BCD: CIF Value x BCD Rate
3. Social Welfare Surcharge: BCD x 10%
4. IGST: (CIF + BCD + SWS) x IGST Rate
5. Total Landed Cost: CIF + BCD + SWS + IGST

Export Duties

Most exports from India are duty-free to promote competitiveness. However, certain items like raw hides, iron ore, and some minerals attract export duties. Exporters can also benefit from:

• Duty Drawback: Refund of customs duties paid on imported inputs used in exported goods
• RoDTEP: Remission of duties and taxes embedded in exported products
• Advance Authorization: Duty-free import of inputs for export production

Free Trade Agreements (FTAs)

India has signed FTAs with several countries and trading blocs, offering reduced or zero customs duties on eligible products:

• ASEAN-India FTA: Covers 10 Southeast Asian nations
• India-Japan CEPA: Comprehensive Economic Partnership Agreement
• India-South Korea CEPA: Bilateral trade agreement
• India-UAE CEPA: Signed in 2022, covering goods, services, and investment
• SAFTA: South Asian Free Trade Area agreement

How BharatkartX Helps

Navigating customs duties can be overwhelming. BharatkartX's expert team handles all duty calculations, HSN classification, documentation, and compliance for your shipments. We ensure you pay the correct duties, claim all available exemptions, and avoid costly penalties.

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