Customs Duty: Meaning, Types, Calculation And Example

Key takeaways 
 

• Customs Act, 1962 is made to impose tax on export and import.
   
• Customs Tariff Act, 1975 presents the duty rates and schedules. The first schedule contains import tariffs and the second one contains export tariffs. It also defines HSN code. 
   
• In 2026, the Indian government exempted some life saving 36 drugs from custom duty.
   
• It is mandatory to have an Importer Exporter Code (IEC) for trade.

The function and guidelines of custom duty is regulated by  Customs Act, 1962 and Customs Tariff Act, 1975 in India. In this article we are going to study how custom acts were implemented, what was its need, and how customs duty calculators India used to calculate the duty. 

Custom duty 

Custom duty is a type of tax which is imposed on goods that come to India from foreign countries and are sent to foreign countries from India. Personal Imports cut duty changed from 20% to 10% for air travelers from April 1, 2026. 

When tax is imposed on imported goods it helps local manufacturers compete in the market. This tax does not let foreign companies acquire the whole Market. Foreign companies tend to sell goods at a cheap price which can surpass local industries. Hence, costume duty plays an important role in the Indian market. The government makes revenue from custom duty. Also, custom duty helps India to regulate and monitor moments of dangerous and sensitive material. 

Calculation of import duty in india 

Last year in December, I bought a laptop from the USA. The cost of that laptop was ₹1,20,000. I paid custom duty like this: 

(Approx)

BCD = 18% of total amount = ₹21,600

SWS = 10% of the BCD amount = ₹2,160

IGST = 18% on the combined value of laptop, SWS, and BCD = ₹25,877.

I paid a total of ₹49,637 as a custom duty and the full cost of my laptop became ₹169,637.

Types of Customs Duty in India

In the above example, there are some terms IGST, SWS, BCD. These are some taxes charged on custom duty.

Basic Customs Duty (BCD): BCD is the main import tax. When you import something, the first tax which is charged on the amount of imported item is BCD. This is set by custom tariff act, 1975. The mentioned rate for the tax is 5-40% by HSN.

Social Welfare Surcharge (SWS): This tax is imposed on BCD. It is 10% of the value of BCD. This fund is used in social works by the government of India.

Countervailing Duty (CVD): It is known as foreign subsidy. In India when something is imported DGTR investigates it and imposes some additional charges. This duty is governed by the World Trade Organization (WTO) and in India it comes under section 9 customs tariff. 

Anti-Dumping Duty: This also works according to the WTO rules. Rates are not specified, it depends on the product. This duty helps the country stop dumping goods. 

Safeguard Duty: this duty is imposed when there is a sudden surge of specific products in the market. It helps local industries to survive. 

On April 1, 2026 the government of India announced the finance bill 2026. Here is the rate slab on different items.

Bonus tip - The duty on sodium antimonate which is used to make glass is reduced from 7.5% to 0% in the 2026-2027 union budget. 

Customs Duty HS Code India

HS code is 8-digit Harmonized System (HS) code. It determines custom duty in India. 

Total duty = BCD + SWS + IGST

Customs Duty Calculator India
 

• Customs Duty Calculator India is managed by the Central Board of Indirect Taxes and Customs (CBIC).  The name of this calculator is  ICEGATE Custom Duty Calculator. 

• To calculate, you need to visit the ICEGATE portal to get 8 digital HS codes. 

• Then add information about product, country, category, and CIF (Cost, Insurance, and Freight).

• You will get results.

Conclusion 

Custom duty is a type of tax that the government of India imposes on imported goods to protect the local market.This is different for different products. You can use a custom duty calculator to calculate it. 

FAQs

How much customs duty will I pay in India? 

This depends on the specific product. To calculate custom duty, you need HS code, value of product, and type of product. Normally, In India custom duty includes BCD, IGST and social welfare tax. 

Why do imported products become expensive because of customs duty?

Imported products become expensive because when it enters the country, custom duty is applicable on it. Various taxes like IGST are also imposed on it. When these products enter the market , the whole cost is included in the final sale.

Can customs duty be avoided when ordering from abroad? 

Custom duty is a legal tax imposed on imported items. It can not be avoided. But for low amounts of items sometimes it can be exempted. It depends on the country.

What is the HS code used in customs duty calculation?

HS code is internationally standardized code. It is used to classify goods for business. In India it is 8 digit code.