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How to Calculate Import Duty in India?

In India, if you are importing a product, the customs department will be charging you a specific amount during the time of this import called an import duty. The Indian government levies this tax in order to safeguard different native industries of this nation from facing unwarranted competition from low-priced foreign goods.

Therefore, if you are planning to get in something from overseas, it is best to calculate import duty for adequate financial planning.

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How Is Import Duty Calculated in India?

The Indian Customs of Central Board of Indirect Taxes and Customs (CBIC) has established a national portal to ensure that e-filling procedures for customs-related services become comparatively straightforward. Known as the Indian Customs Electronic Data Interchange Gateway (ICEGATE), this portal provides a customs calculator that you can use to calculate your payable import duty without any hassle.

[Source]

Steps to Calculate Import Duty

A step-by-step procedure of how to calculate import duty tax using this calculator has been described below:

Step 1: Navigate to this official portal.

Step 2: Under the ‘Services’ tab, select the “Custom Duty Calculator”.

Step 3: Enter captcha code exactly how it is being displayed on your screen.

Step 4: Click on submit button.

Step 5: Choose option “Trade Guide on Imports”.

Step 6: Under option called “CTH”, you will need to provide the Harmonised System of Nomenclature Code or HSN code of the product that you are importing. Note that you can also input a general description of the product for the same.

Step 7: For option of “Country of Origin”, you will get a drop-down menu from which you will need to select name of the nation from which you are importing your product.

Step 8: Click on “Search” button.

Step 9: Subsequently, rates of duty for a wide variety of goods that fall under the product category you have selected beforehand will be shown on your screen. Ensure to point down which taxation rate is applicable to you.

Once you have got a percentage, refer to the generated invoice of your product to retrieve its assessable value. Please note that import duty-related arithmetic is always done on the basis of this value, which is a summation of different costs such as:

Price of product you have purchased
Charges related to insurance
Freight Charges
Handling Charges
Landing Charges

As a result, you can find out the amount you will need to pay as import duty by calculating what the aforementioned percentage of this assessable value produces.

Note that the presence of pertinent information on the product invoice is pivotal for you to make sure this calculation is done without any scope of error. So, when you are purchasing a product, get in touch with sellers to ensure they include all the relevant data points in their invoices.

[Source]

What Factors Are Affective When Import Duty Is Calculated?

There are a number of factors on which the import duty payable is calculated. Some of these aspects include the following:

The present market value of the product in question
Presence or absence of any free trade agreements between this country and the one for which you are importing the products
Description of these imported goods
The country from which these goods are coming in
Whether there are any country-specific regulations in place
The end-use of the product: as in whether it will be used for personal or commercial purposes

What Are the Benefits of Import Duty?

Levying an import duty against goods shipped overseas can have multifaceted benefits for the economy of the country in the long run. Some of these positive outcomes include:

Substantial increase in the tax revenue generated by the government of a country.
Giving indigenous enterprises a competitive edge on the global market by ensuring the product they produce remains cheaper than the cost of importing similar items. Additionally, a hike in demand for a product can lead to new job avenues opening up in this industry down the line.
If there are persistent unfair trade practices from a partnering country, a government can use such tariffs as a measure of sanction.
On the other hand, such customs practices can be a stepping stone of international business-related conversations between two countries, resulting in cross-border collaborative global efforts.
Such a tariff can also work as a primary step of a screening procedure by a government if it has a legitimate reason to believe an imported product can be a threat to a country’s national security.

As one can gather from the discussion above, import duty is a quintessential expenditure for you when getting any goods shipped overseas. However, as it is a complicated procedure, not keeping adequate track of these taxation methods might lead to you paying an unnecessary and additional charge.

That is why it is always ideal for calculating import duty yourself, as per the rules of the Indian government, to make sure you are being charged an adequate amount.

FAQs About How to Calculate Import Duty in India

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Which law does provide the guiding principles of the import duty calculation?

Import duty and other customs-oriented principles are formed in India based on the rules and regulations stated by the Customs Act of 1962.

What are the after-effects if you fail to duly pay off your import duty on time?

If you are unable to pay off the entirety of the import duty before the deadline or have a specific portion of the amount outstanding, you will need to pay an additional interest.

Can you get possession of an imported product before setting an overdue import duty?

Please note that up until you have settled all the customs-related tariffs and charges, you are not legally allowed to claim possession or ownership of a product that you have imported.

Can an individual avoid paying customs duties when importing a product?

You will not need to pay import duty for certain products only if you have any of these licences beforehand:

Advance Licence.
Special Advance License.
Value-Based Advance License.

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