The import duties in India

The original post below was posted before CBEC released the import duty calculator on their website. To that extent, the post below is now redundant. You may go here:

In this blog I shall talk of various types of import duties/cess levied on products imported into India. I shall take an example and demonstrate the calculation method. 

I assume one knows how to read HS codes. One can find the HS code for products from DGFT website (under download section). Let's take the HS code 8474 80 10, which belongs to Brick making machine.

The best way to find the correct duty is to catch hold of any Customs House Agent (CHA). Else, there are manual and books from which one can look up the values. On websites, the data for various components of import duties, are scattered and is difficult to collect for getting the whole picture. Anyway, for the duty calculations, the following steps are followed:

 The duties levied are as follows (with brief descriptions)

     - Basic Customs duty (as would be given here) which is 7.5 % for the product we took for example.

     - Additional Duty/CVD (mistakenly referred as CVD) which is equal to central excise duty paid on like product. . It should be around 10 to 16 percent. It is 16% in this case. See here to find out how I found it out.

     - Countervailing duty/Additional Duty of Customs : This is levied to give level playing field for our local manufacturers as they pay excise duty for input material if they make similar machine.

     - Various education cess (calculated on Additional duty/CVD). This is standard 3% as shown in example below

     - Anti dumping duty if applicable (it's not applicable for your product right now. You can check it in the same webpage for basic customs duty, that is,  here)

     - Safeguard duty 

    -  Preferential duty 

     - Special CVD- to countervail the local state taxes faced by local manufacturers. It is generally around 4 %

Let's now calculate it for our product, which has the HS Code 8474 80 10

Duty is calculated on CIF (cost, insurance and freight) value and not on invoice value. The CIF value is practically the value when it lands in the port of import. This includes, the cost plus insurance plus transport cost from exporting coutnry to Indian port. 

So if the CIF value is say Rs 10000 (add 1% as landing cost to this, I have ignored for simplicity)
then assuming Basic dity of 7.5%, the cost is 10000 + 750 = 10750
on this add additional duty of 16%, i.e. 10750 + (0.16*10750) =  10750 + 1720 = 12470
education cess of excise = 3% of 1720 = 51.6
duty value for education cess of customs = 2470+51.6 = 2521.6
education cess of customs = 3% of 2521 = 75.63
Total value = 12521.6+75.63 = 12597.23
On this add 4% of special CVD = 12597 + 4% of 12597 = around 13100

So your ballpark figure for the item is around 31% of import duty. 

So, in WTO negotiations, one usually talks about Basic Customs duty of 7.5% (applied tariff, bound is even higher), whereas the actual duty in the end is around 31%. 

PS: There's an update for this blogpost, post the 2102-13 budget presentation in the Parliament. The education cess on the additional duty of customs is lifted. So, in the above calculation, the 3% that's added to 16% duty is no longer there. (The 51.6 rupees becomes zero)


  1. This is very helpful. It would be nice if you could share more about applied tariff and bound tariff.

    1. @incognito:
      Bound rates refer to the maximum rate of tariff as agreed by a country during WTO negotiations. Applied rate is the actual rate that is applied on ground. The difference is known as 'water'
      e.g. The bound rate might be say 30% for the product we spoke in the post, whereas the applied rate on ground is just 7.5%. And the water is 22.5%.

  2. If any one refer the book "Handbook of Customs and Valuation Import and Export" by Deepak Kumar ISBN : 8186234446 one can know how easy to calculate import duties....


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