DGFT IEC code

Customs Duty & Import Procedure in India 1. Why Customs Duty Matters in 2026 India is one of the world’s fastest-growing import markets. In FY 2024-25, India’s total merchandise imports crossed USD 677 billion. Whether you are a startup sourcing raw materials, a manufacturer importing machinery, or a trader bringing in finished goods, understanding Customs Duty and the Import Procedure is non-negotiable. Customs Duty in India is governed primarily by the Customs Act, 1962, the Customs Tariff Act, 1975, and relevant Notifications issued by the Central Board of Indirect Taxes & Customs (CBIC). The Finance Act 2025 and Union Budget 2025-26 introduced several revisions to duty rates and procedures, which this guide reflects. Failing to comply with customs regulations can result in detention of goods, heavy penalties, and even prosecution. This comprehensive guide walks you through every aspect — from what customs duty is, to how to clear your shipment step-by-step in 2026.   2. What is Customs Duty? Customs Duty is an indirect tax levied by the Central Government of India on goods imported into (and in some cases exported from) Indian territory. It is administered by the Customs Department under the CBIC. 2.1 Legal Basis Customs Act, 1962 — the principal legislation governing import/export Customs Tariff Act, 1975 — prescribes duty rates via the Harmonised System of Nomenclature (HSN) Finance Act (Annual) — modifies rates each year; Finance Act 2025 is the latest CBIC Notifications & Circulars — exemptions, concessions, and procedural rules 2.2 Who Pays Customs Duty? The importer of record is liable. This can be an individual, a company, a partnership firm, or any legal entity bringing goods into India. Even gifts and courier shipments above prescribed limits attract customs duty.   3. Types of Customs Duties in India (2026) India’s customs duty structure consists of multiple components. Understanding each is essential for calculating your total import cost.   Duty Type Short Name Applicability Rate / Basis (2026) Basic Customs Duty BCD All imported goods 0%–150% as per HSN; avg. ~7.5% Integrated GST IGST All imports (replaces CVD+SAD) 5% / 12% / 18% / 28% as per GST schedule Customs Handling Fee CHF All imports — value addition 1% of CIF value (capped at ₹1 lakh for non-commercials) Social Welfare Surcharge SWS Most goods on BCD amount 10% on BCD (nil on some commodities) Agriculture Infrastructure & Dev. Cess AIDC Select agri goods & gold/silver As notified; e.g., 2.5% on gold Anti-Dumping Duty ADD Specific goods from specific countries As notified by CBIC (case-specific) Countervailing Duty (on subsidised goods) CVD (new) Goods benefitting from foreign subsidies As notified (case-specific) Safeguard Duty SGD Surge in specific imports harming domestic industry Temporary, as notified Health Cess HC Medical devices 5% on BCD value (as per Finance Act 2020, still active 2026) Road & Infrastructure Cess RIC Imported petrol/diesel/crude As applicable per Budget Important Note — Budget 2025-26 Change The Union Budget 2025-26 (presented 1 February 2025) rationalised BCD rates significantly. Over 36 tariff items had BCD reduced to promote domestic manufacturing under Make in India. Mobile phone parts: BCD reduced from 15% to 10% on several sub-components. Lithium-ion batteries: BCD reduced to 5% to support EV sector. Gold & Silver: BCD reduced to 6% from 15% (announced in Interim Budget, confirmed in Full Budget). Always verify the current rate on the CBIC website or the Customs Tariff Schedule before shipment.   4. How Customs Duty is Calculated — Step-by-Step All customs duty calculations use CIF (Cost + Insurance + Freight) as the assessable value, also called ‘Transaction Value’ as per Rule 3 of the Customs Valuation Rules, 2007. 4.1 The Standard Formula Component Description / Formula 1. FOB Value (USD) Price of goods as per invoice 2. + Freight Actual freight or 20% of FOB (whichever is lower) if freight unavailable 3. + Insurance Actual insurance premium or 1.125% of FOB if actual not available 4. = CIF Value (USD) Step 1 + 2 + 3 5. Convert to INR CIF (USD) × CBIC Exchange Rate (notified fortnightly) 6. + Landing Charges 1% of CIF value in INR 7. = Assessable Value (AV) CIF (INR) + Landing Charges 8. Basic Customs Duty (BCD) AV × BCD Rate % 9. Social Welfare Surcharge (SWS) BCD × 10% 10. Total Customs Duty Base AV + BCD + SWS 11. IGST Total Customs Duty Base × IGST Rate % 12. Total Duty Payable BCD + SWS + IGST + any cess/ADD 4.2 Worked Example — Importing Cotton Fabric from China Example: Cotton Fabric (HSN 5208) — CIF USD 10,000 FOB Value: USD 10,000 | Freight: USD 800 | Insurance: USD 112.50 CIF (USD): USD 10,912.50 CBIC Exchange Rate (assumed): ₹86.50 per USD CIF (INR): ₹9,43,931 Landing Charges (1%): ₹9,439 Assessable Value (AV): ₹9,53,370 BCD @ 20% (Fabric): ₹1,90,674 SWS @ 10% on BCD: ₹19,067 IGST Base: ₹9,53,370 + ₹1,90,674 + ₹19,067 = ₹11,63,111 IGST @ 5%: ₹58,156 TOTAL DUTY PAYABLE: ₹1,90,674 + ₹19,067 + ₹58,156 = ₹2,67,897 Effective Duty Rate on AV: ~28.1% Note: IGST paid at import is creditable as Input Tax Credit (ITC) in your GST returns.   5. The Complete Import Procedure in India — Step by Step (2026) India’s import clearance is handled through the Indian Customs EDI System (ICEGATE). All documentation is electronic. Here is the complete step-by-step process:   Step 1 — Obtain IEC (Importer Exporter Code) Before you can import anything commercially, you need an IEC from the DGFT (Director General of Foreign Trade). IEC is a 10-digit code linked to your PAN. Without IEC, customs clearance is not possible for commercial imports. Apply online at dgft.gov.in Documents required: PAN Card, Bank Certificate / Cancelled Cheque, Address Proof Fee: ₹500 (online) Processing time: 1–2 working days (mostly auto-approved) Step 2 — Arrival of Goods & Filing Arrival Entry (IGM) When the vessel or aircraft arrives at an Indian port, the carrier files an Import General Manifest (IGM) with Customs. The IGM details all goods aboard. The importer gets a Bill of Lading (B/L)