1. Start with CIF Value
CIF means cost, insurance, and freight. Customs valuation usually begins with the invoice value plus freight and insurance converted into INR using the applicable customs exchange rate.
2. Apply Basic Customs Duty
BCD varies by product category and HSN code. Two shipments with similar invoice values can face very different duty outcomes because the tariff classification is different.
3. Add Social Welfare Surcharge
SWS is normally calculated as a percentage of the BCD amount. It is not applied independently to the full invoice value.
4. Calculate IGST
IGST is commonly charged on CIF plus BCD plus SWS. That means the tax base is larger than the original invoice value, which is why many importers underestimate total cost when they only check invoice value and freight.
5. Watch for Product-Specific Changes
- HSN classification can raise or lower BCD materially.
- Exemptions, notifications, or anti-dumping rules can alter the total.
- Compensation cess may apply for selected products.
- Documentation errors can delay assessment even if your math is correct.
For a quick scenario test, use the Landing Cost Calculator. For actual purchase decisions, confirm the HSN and duty treatment before cargo dispatch.
Common mistake: importers often calculate BCD but forget that IGST is charged on an expanded base, which makes the final tax significantly higher than expected.