When you import goods into India, you pay import duty (also called customs duty) at the port. It has three parts: Basic Customs Duty (BCD), Social Welfare Surcharge (SWS) and IGST. Many people add the BCD rate and the IGST rate and think that is the total. It is not. The real total is higher.
This post explains how the calculation works, step by step, in simple words. At the end there is a full example with real numbers.
In short:
- Add freight and insurance to the price of the goods. This is the assessable value.
- BCD = assessable value × BCD rate.
- SWS = 10% of the BCD amount.
- IGST = (assessable value + BCD + SWS) × IGST rate.
You can do all four steps in our Import/Export Duty Calculator.
Words used in this post
- Assessable value (AV): the value customs uses to calculate duty. It is the price of the goods plus freight and insurance up to the Indian port.
- BCD (Basic Customs Duty): the main import duty. The rate depends on the product.
- SWS (Social Welfare Surcharge): an extra charge of 10% of the BCD amount.
- IGST: the GST charged on imports. The rate is the same as the GST rate for that product in India.
- Landed cost: the full cost of the goods after they reach India. It is the assessable value plus all the taxes.
- Bill of entry: the form you (or your customs broker) file to clear goods at the port.
Step 1: Find the assessable value
Customs does not use only the price on your supplier's invoice. It uses the assessable value. This is the price of the goods plus the cost of freight and insurance to bring them to the Indian port or airport.
Look at the incoterm on your invoice or purchase order. The incoterm is a short code like FOB or CIF. It tells you what the supplier's price already includes.
| Incoterm | Supplier's price includes | What you need to add |
|---|---|---|
| EXW (Ex Works) | Only the goods | All transport up to the Indian port, and insurance |
| FOB (Free On Board) | Goods loaded on the ship | Freight and insurance |
| CFR / CNF (Cost & Freight) | Goods and freight | Insurance only |
| CIF (Cost, Insurance & Freight) | Goods, freight and insurance | Nothing |
Our calculator works the same way. If you choose CFR, it switches off the freight box. If you choose CIF, it switches off both boxes, so you do not add them twice.
For EXW: add all the transport cost, not only the ship or air freight. The truck from the supplier's factory to the port in their country also counts.
Three more things to know:
- If you do not know the real freight or insurance cost, customs uses fixed amounts: 20% of the FOB value for freight and 1.125% of the FOB value for insurance. 20% is usually more than real sea freight, so keep your real freight invoice ready.
- If your invoice is in dollars or another currency, customs converts it at the exchange rate published by CBIC. This is not your bank's rate. CBIC updates the rate every two weeks. The rate on the day you file the bill of entry is the one used.
- Old guides may add a 1% "landing charge". India stopped this in 2017. Do not add it.
Step 2: Calculate Basic Customs Duty (BCD)
BCD is the main import duty. Each product has its own rate.
BCD = Assessable value × BCD rate
Rates are different for different products. Many raw materials and machines have a low rate (0% to 10%). Many parts have a middle rate (10% to 20%). Some finished consumer products have a higher rate. In Budget 2025-26 the government reduced the number of BCD rates to eight (including zero), so check your rate again if you last looked a few years ago.
Rates can change at any time, not only in the Budget. For example, from 24 September 2026 (Notification No. 31/2026-Customs), BCD on crude palm oil and crude soybean oil went down from 10% to 5%, and BCD on crude sunflower oil went down from 10% to zero.
One more point: the rate in the customs tariff is not always the rate you pay. Many products get a lower rate through a government exemption notification, or through a free trade agreement if you have a valid certificate of origin. The ICEGATE duty calculator shows the rate you actually pay.
Step 3: Calculate Social Welfare Surcharge (SWS)
SWS started in 2018. The normal rate is 10%. The important point: it is 10% of the BCD amount, not 10% of the goods' value.
SWS = BCD × 10%
So if BCD is 10%, SWS adds 1% of the assessable value. If BCD is 20%, SWS adds 2%. If BCD is zero, SWS is also zero.
Some products do not pay SWS, or pay a different rate. In Budget 2025-26, SWS was removed from 82 tariff lines that already pay another cess. Our calculator uses the normal 10%, so check your product if it may be one of these.
Step 4: Calculate IGST
This is the step where most people make a mistake.
IGST on imports is not charged on the goods' value alone. It is charged on the assessable value plus BCD plus SWS:
IGST = (Assessable value + BCD + SWS) × IGST rate
So you pay IGST on the customs duty too. If you calculate IGST only on the goods' value, your number will be too low.
The IGST rate is the same as the normal GST rate for that product in India. Since September 2025 (GST 2.0), the GST rates are 0%, 5%, 18% and 40%. The old 12% and 28% rates no longer exist. Read what changed in the new GST rates if you are not sure.
Full example: a ₹5,00,000 FOB shipment
You import machine parts. The details are:
- Supplier's price: ₹5,00,000, on FOB terms (already in rupees)
- Sea freight: ₹15,000
- Insurance: ₹2,500
- BCD rate: 10%
- IGST rate: 18%
| Step | How to calculate | Amount |
|---|---|---|
| Goods value (FOB) | ₹5,00,000.00 | |
| + Freight | FOB does not include it | ₹15,000.00 |
| + Insurance | FOB does not include it | ₹2,500.00 |
| Assessable value | ₹5,17,500.00 | |
| BCD | 10% × ₹5,17,500 | ₹51,750.00 |
| SWS | 10% × ₹51,750 | ₹5,175.00 |
| Value for IGST | ₹5,17,500 + ₹51,750 + ₹5,175 | ₹5,74,425.00 |
| IGST | 18% × ₹5,74,425 | ₹1,03,396.50 |
| Total duty | ₹51,750 + ₹5,175 + ₹1,03,396.50 | ₹1,60,321.50 |
| Landed cost | ₹5,17,500 + ₹1,60,321.50 | ₹6,77,821.50 |
What this example shows:
- Total duty is about 31% of the assessable value, not 28% (10% + 18%). The extra comes from SWS and from paying IGST on the duty.
- If you charged IGST only on the assessable value, you would get ₹93,150. That is ₹10,246.50 less than the real amount.
- If you forgot freight and insurance, all three taxes would be too low.
These numbers are the default values in our Import/Export Duty Calculator. Open it and you will see the same result. Then change the numbers to match your own shipment.
Which taxes can you get back?
You pay the full ₹1,60,321.50 at the port. But if you have GST registration, some of it comes back:
- IGST: yes. You can claim it as input tax credit (ITC). When the bill of entry shows in your GSTR-2B, you can use the ₹1,03,396.50 to pay the GST on your own sales.
- BCD and SWS: no. These are a real cost. In the example that is ₹56,925, or 11% of the assessable value. Use this number when you set your selling price.
If you do not have GST registration, or you are in the Composition Scheme, you cannot claim the IGST. Then the full ₹1,60,321.50 is your cost.
How to find the right rates for your product
BCD and IGST rates depend on the exact 8-digit tariff code of your product. Follow these steps:
- Find the HSN code for your product with our HSN/SAC Code Finder.
- Check the exact 8-digit code and the BCD rate you will actually pay on the official ICEGATE customs duty calculator, or ask your customs broker.
- Check if any extra duty applies to your product, like Anti-Dumping Duty or AIDC. These are not included in this post or in our calculator.
- Put the rates, freight and insurance into the Import/Export Duty Calculator to get your landed cost.
What about exports?
Exports are much simpler. Most goods have no export duty. Export duty applies only to a small list of products. When it applies, it is charged on the FOB value.
Exports also do not carry GST. You can export under a LUT (Letter of Undertaking) and pay no IGST, or pay IGST and get a refund later. Our calculator has an Export from India option, and the LUT & Export GST Refund Helper explains both choices.
Summary
- First, add freight and insurance to the goods' price. This is the assessable value.
- BCD is charged on the assessable value.
- SWS is 10% of the BCD.
- IGST is charged on the assessable value + BCD + SWS.
- With GST registration, you can claim the IGST back. BCD and SWS are a real cost.
Sources
- ICEGATE customs duty calculator
- CBIC: customs tariff, notifications and exchange rates
- Union Budget 2025-26 proposes to remove seven customs tariff rates for industrial goods — PIB
- CBEC revises customs valuation norms (landing charges removed, September 2017) — PwC
- Budget 2026: Key Customs, Excise & GST Legislative and Duty Changes — TaxGuru
- Govt cuts import duties on palm, soya and sunflower oils to curb prices — Business Standard
This post is correct as of 24 September 2026. Duty rates can change at any time through government notifications. Always check the rate for your product before you file a bill of entry.