Indian import duty is not a single number. It's a stack of computations applied in a specific order — get the order wrong and the totals are wrong.
The formula, in arithmetic
Step 1 — Assessable Value (AV): CIF value (cost + insurance + freight) + 1% of CIF as landing charge.
Step 2 — BCD (Basic Customs Duty): AV × BCD rate (varies by 8-digit HS code; published in CBIC tariff).
Step 3 — AIDC / Health Cess (if applicable): AV × AIDC rate. Currently applies to selected categories (gold, silver, solar cells, certain medical inputs).
Step 4 — ADD (Anti-Dumping Duty) / CVD (Countervailing Duty): Per the DGTR notification — typically a per-MT or per-piece amount, sometimes ad valorem.
Step 5 — SWS (Social Welfare Surcharge): 10% × (BCD + AIDC).
Step 6 — IGST: (AV + BCD + AIDC + ADD + SWS) × IGST rate (5/12/18/28% per HS schedule).
Step 7 — Compensation Cess (if applicable): on the IGST base, mostly for tobacco, motor vehicles, aerated waters.
Worked example 1 — LED panel lights from China (HS 9405 41 90)
| Component | Rate | Amount (₹) |
|---|---|---|
| CIF | — | 10,00,000 |
| Assessable Value (CIF + 1%) | — | 10,10,000 |
| BCD | 20% | 2,02,000 |
| SWS | 10% of BCD | 20,200 |
| IGST base | — | 12,32,200 |
| IGST | 18% | 2,21,796 |
| Total duty | — | 4,43,996 |
Effective duty rate: 44.4% on CIF.
Worked example 2 — Mobile phones from China (HS 8517 12 19)
| Component | Rate | Amount (₹) |
|---|---|---|
| CIF | — | 50,00,000 |
| AV | — | 50,50,000 |
| BCD | 20% | 10,10,000 |
| SWS | 10% of BCD | 1,01,000 |
| IGST | 18% | 11,09,790 |
| Total | — | 22,20,790 |
Worked example 3 — Solar cells from China (HS 8541 40 11)
Solar cells attract BCD 20% + AIDC 20% + ADD (per producer) + IGST. Stack:
- AV: 1,00,00,000
- BCD 20%: 20,00,000
- AIDC 20%: 20,00,000
- ADD (assume ₹40/W × 5,00,000W): 2,00,00,000
- SWS 10% on (BCD+AIDC): 4,00,000
- IGST 18% on (AV + BCD + AIDC + ADD + SWS = 3,44,00,000): 61,92,000
- Total duty: 3,05,92,000
Effective duty rate: 305% on CIF — solar cell duty is structurally punitive to support domestic manufacturing.
Where importers most often miscalculate
- SWS base: SWS is 10% of (BCD + AIDC), not 10% of AV. Common error.
- IGST base: IGST is on the duty-loaded base (AV + BCD + AIDC + ADD + SWS), not on AV alone.
- ADD overlooked: ADD is producer-specific and can't be assumed nil. Check the latest DGTR notification for the China supplier.
- FTA preference unused: If the goods qualify under India-ASEAN, India-Korea or India-Japan FTA, BCD can drop materially — but you need CAROTAR Form I.
Want a duty estimate for your specific consignment? Send us the commercial invoice and HS code (or product description) — we'll model the full stack including FTA preference scenarios.
Aman Gupta, Founder — Aurum Global Logistic