Customs Duty Types explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Imports into India attract several duties in a fixed sequence: Basic Customs Duty under the Customs Tariff Act 1975, cesses such as AIDC, Social Welfare Surcharge at 10% of customs duties, and IGST under Section 3(7) on the value-plus-duty base. Trade-remedy duties — anti-dumping, countervailing and safeguard — apply over and above where notified.
Overview
The "customs duty" on an import is really a stack of levies, each with its own legal source and base. Understanding the stack is essential because the surcharge and IGST are charged on a base that already includes the duties below them. Only the IGST portion is creditable; BCD, SWS and cesses are real costs that must be built into landed cost.
Legal Basis
Import duty is charged under Section 12 of the Customs Act 1962 at rates in the Customs Tariff Act 1975. IGST on imports is levied under Section 3(7) and compensation cess under Section 3(9) of that Act. SWS flows from the Finance Act 2018; AIDC from the Finance Act 2021. Trade-remedy duties are under Sections 8B, 9 and 9A of the Customs Tariff Act.
The Main Duties
| Duty | Legal source | Typical base |
|---|---|---|
| Basic Customs Duty (BCD) | Customs Tariff Act 1975, First Schedule | Assessable value |
| AIDC / other cess | Finance Act 2021 (AIDC) | Assessable value (item-specific) |
| Social Welfare Surcharge | Finance Act 2018 | 10% of aggregate customs duties |
| IGST | Sec 3(7), Customs Tariff Act | Value + BCD + cess + SWS |
| Compensation Cess | Sec 3(9), Customs Tariff Act | Same base as IGST (specified goods) |
| Anti-dumping / CVD / Safeguard | Sec 9A / 9 / 8B | Notification-specific |
Rates vary widely by HS code and by exemption notification — always verify the current rate against the tariff and notifications for the specific CTH.
Order of Calculation — Worked Example
Assessable value ₹5,00,000; BCD 10%; SWS 10%; IGST 18% (no cess, no AIDC).
- BCD = 10% × ₹5,00,000 = ₹50,000
- SWS = 10% × ₹50,000 = ₹5,000
- IGST base = ₹5,00,000 + ₹50,000 + ₹5,000 = ₹5,55,000
- IGST = 18% × ₹5,55,000 = ₹99,900
- Total duty = ₹1,54,900. Of this, only IGST ₹99,900 is creditable; ₹55,000 (BCD + SWS) is a cost.
Trade-Remedy Duties
- Anti-dumping duty (Sec 9A): imposed after a DGTR investigation where goods are exported to India below normal value causing injury to domestic industry.
- Countervailing duty (Sec 9): offsets subsidies given by the exporting country.
- Safeguard duty (Sec 8B): temporary protection against a sudden surge in imports.
Common Pitfalls
- Assuming SWS applies to IGST — it does not; SWS is only on customs duties.
- Missing an applicable anti-dumping notification on the specific origin, leading to demands.
- Building non-creditable BCD/SWS into pricing incorrectly and eroding margins.
- Overlooking AIDC where BCD was cut but the cess replaced part of the incidence.