How to Calculate Duties and Taxes on Imports to India is a critical step for any international business. Import duties and taxes are mandatory levies that depend on your product's classification (HS Code), its customs valuation, and the country of origin. The calculation is overseen by the Central Board of Indirect Taxes and Customs (CBIC). Crucially, India maintains a very low de minimis threshold of just ₹1,000 for courier and postal shipments, meaning nearly all commercial imports are subject to Basic Customs Duty (BCD) and Integrated Goods and Services Tax (IGST) upon entry.
The primary duty levied on imports is the Basic Customs Duty (BCD). This rate is determined by the specific classification of your goods under the Indian Customs Tariff. In addition to BCD, imports are subject to the Integrated Goods and Services Tax (IGST), which is the equivalent of the national GST applied to the import transaction. Other potential levies include the Social Welfare Surcharge (SWS) and Anti-Dumping or Safeguard Duties, depending on the product and its origin. The Indian government, through its 2025-26 Budget, has simplified the tariff structure and consolidated many exemptions to enhance the ease of doing business.
To accurately calculate import tax in India and determine the total landed cost, importers must follow a structured process that begins with correct product classification and customs valuation. The process answers the core query: 'how import duty is calculated in India'.
1. Product Classification (HS Code): India uses the 8-digit ITC(HS) Code structure for import classification. The first six digits align with the international Harmonized System (HS) Code, while the final two digits provide national-level specificity. Correctly identifying this 8-digit import code is the foundation for determining the applicable Basic Customs Duty (BCD) rate.
2. Customs Valuation Basis: The dutiable value, known as the Assessable Value (AV), is determined primarily by the transaction value, following the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. For most imports, the AV is calculated on a CIF-like basis: Cost of Goods + Insurance + Freight and other charges up to the place of importation. If the actual insurance cost is not provided, Indian Customs may calculate it as 1.125% of the FOB value. This Assessable Value is the base for calculating BCD.
3. Calculating Duties and Taxes: The total duty and tax are calculated sequentially. First, BCD is applied to the Assessable Value. Second, the Integrated Goods and Services Tax (IGST) is applied to the sum of the Assessable Value plus the BCD and any other applicable duties/cesses. This cascading calculation is crucial for determining the final 'import tax calculator India' result. The IGST rates, as of September 2025, are primarily 0%, 5%, 18%, and 40%.
4. De Minimis Threshold: For low-value shipments, the de minimis threshold is a key factor. India’s threshold for both duty and tax on courier parcels is fixed at ₹1,000. Any commercial shipment with an Assessable Value above this minimal amount will attract full customs duties and taxes, including BCD and IGST. This low threshold means that most cross-border eCommerce and small commercial imports are fully dutiable.
5. Trade Agreements: Importers should check if the country of origin has a Free Trade Agreement (FTA) with India. Goods imported under an FTA may qualify for a reduced or Nil BCD rate, significantly lowering the overall 'customs duties in India'. The Directorate General of Foreign Trade (DGFT) manages the policy for these preferential rates.
Determine the 8-digit ITC(HS) Code for your product to find the Basic Customs Duty (BCD) rate and other applicable cesses.
Calculate the Assessable Value (AV) by adding the Cost of Goods, Freight, and Insurance (CIF value) to the port of import. If insurance is unknown, use 1.125% of the FOB value.
Calculate the Basic Customs Duty (BCD) by applying the BCD rate to the Assessable Value (AV).
Calculate the Integrated Goods and Services Tax (IGST) by applying the IGST rate (e.g., 5%, 18%) to the sum of (AV + BCD + any other applicable duties/cesses). The total payable is the sum of BCD, IGST, and all other cesses.
A commercial shipment with an Assessable Value (AV) of ₹900: Since the value is below the ₹1,000 de minimis threshold for courier/postal imports, the shipment may be exempt from BCD and IGST, though this exemption is strictly applied and often requires non-commercial declaration.
A commercial shipment with an Assessable Value (AV) of ₹1,500: As the value exceeds the ₹1,000 de minimis, the shipment is fully dutiable. BCD and IGST will be calculated on the full AV, plus any other applicable cesses, resulting in a total tax liability.
Misclassifying the 8-digit ITC(HS) Code, which can lead to incorrect duty rates, customs delays, and potential penalties from the CBIC.
Failing to include all costs (Freight and Insurance) in the Assessable Value, leading to undervaluation and subsequent re-assessment by Customs authorities.
Assuming a high de minimis threshold for low-value eCommerce shipments; the actual threshold is only ₹1,000, making most small parcels dutiable.
India's customs landscape includes several special provisions. The CBIC has consolidated 31 customs duty notifications into a single, simplified Notification No. 45/2025-Customs, effective November 1, 2025, to streamline exemptions and compliance. Furthermore, the government has implemented targeted duty cuts, such as reducing or eliminating BCD on raw materials and inputs for export-oriented sectors like textiles, to boost domestic manufacturing and export competitiveness. Importers should also be aware of the mandatory 10-digit Import Export Code (IEC) required for all commercial imports.
The de minimis threshold for duty and tax on courier and postal imports to India is fixed at ₹1,000. Shipments above this value are subject to full duties and taxes.
Customs valuation in India is based on the transaction value, which is the price actually paid or payable, adjusted to include costs like freight and insurance up to the place of importation (CIF-like basis).
The main import taxes are the Basic Customs Duty (BCD) and the Integrated Goods and Services Tax (IGST). Other levies may include the Social Welfare Surcharge and Anti-Dumping Duty.
The primary electronic system for customs clearance and filing of the Bill of Entry is the Indian Customs Electronic Data Interchange Gateway (ICEGATE) and the Indian Customs EDI System (ICES).