India Import Compliance: Duties, Customs, GST for Chinese Goods

Importing goods from China into India requires a clear understanding of customs duties, GST, and documentation. This article provides a practical checklist covering the key compliance steps, from obtaining an Import Export Code (IEC) to paying the correct duties and filing the Bill of Entry.

Formula

The total import duty and tax are calculated on the Assessable Value (CIF value – Cost, Insurance, and Freight). The formula is:

Total Duty = BCD + SWS + IGST

Where:

• BCD = Assessable Value × (Basic Customs Duty rate / 100)
• SWS = BCD × (Social Welfare Surcharge rate / 100)
• IGST = (Assessable Value + BCD + SWS) × (IGST rate / 100)

All values are in Indian Rupees (INR). The rates are percentages set by the government and vary by product.

Worked Example

Suppose you import goods with an Assessable Value of ₹100,000. The Basic Customs Duty is 10%, the Social Welfare Surcharge is 10% of the BCD, and the IGST rate is 18%.

1. Calculate BCD: ₹100,000 × (10/100) = ₹10,000
2. Calculate SWS: ₹10,000 × (10/100) = ₹1,000
3. Calculate IGST: (₹100,000 + ₹10,000 + ₹1,000) × (18/100) = ₹111,000 × 0.18 = ₹19,980
4. Total Duty & Tax: ₹10,000 + ₹1,000 + ₹19,980 = ₹30,980

So the total import duty and tax payable is ₹30,980.

Key Documents for Importing from China

Before your goods arrive, ensure you have the following documents ready:

• Import Export Code (IEC): A mandatory 10-digit code issued by the DGFT. Apply online at the DGFT website.
• Bill of Lading (B/L) or Airway Bill: The transport document from the carrier.
• Commercial Invoice: Shows the value, description, and quantity of goods.
• Packing List: Details of packaging, weight, and dimensions.
• Bill of Entry (BOE): Filed electronically via ICEGATE or a customs broker. It declares the goods for customs clearance.
• GST Invoice: Required for claiming input tax credit on IGST paid.
• Import Declaration (if applicable): For certain goods, like electronics, you may need additional clearances (e.g., BIS certification).

How to Calculate Import Duty and GST

Import duty consists of several components:

• Basic Customs Duty (BCD): Varies by HS code, typically 0% to 30%.
• Social Welfare Surcharge (SWS): 10% of BCD (on most goods).
• Integrated GST (IGST): Equal to the GST rate for the product (5%, 12%, 18%, or 28%). It is levied on the sum of Assessable Value + BCD + SWS.
• Compensation Cess: Applies to certain luxury/demerit goods like tobacco and cars.

You can use the calculator above to estimate total duty. The actual rate depends on the HS code of your product.

Common Mistakes to Avoid

• Incorrect HS Code: Using the wrong code leads to wrong duty rates and potential penalties.
• Under-valuation: Declaring a lower value to reduce duty is illegal and can result in heavy fines.
• Missing IEC: You cannot clear customs without an IEC.
• Ignoring BIS/Other Regulations: Some products (electronics, toys, chemicals) require mandatory BIS certification. Importing without it leads to confiscation.
• Not factoring in freight and insurance: The assessable value includes CIF, not just the FOB price.

Step-by-Step Import Process

1. Obtain IEC: Apply online at the DGFT portal (fee ₹500).
2. Identify HS Code: Use the Indian Customs Tariff to find the correct code.
3. Check for restrictions: Ensure the product is not banned or restricted. Check the DGFT import policy.
4. Place order with supplier: Ensure the supplier provides all necessary documents.
5. Arrange shipping: Choose a freight forwarder or shipping line.
6. File Bill of Entry: Through a customs broker or self-file on ICEGATE.
7. Pay duties: Pay BCD, SWS, IGST, and any cess online.
8. Customs inspection: Goods may be inspected; ensure documents match.
9. Clearance and delivery: After clearance, goods are released for delivery.

Frequently Asked Questions

Do I need a GST registration to import goods?

Yes, you need GST registration to import goods into India. Without it, you cannot pay IGST or claim input tax credit. Even if you are not selling, you must be registered to clear customs.

What is the difference between FOB and CIF?

FOB (Free On Board) means the seller pays for transport to the port and loading. CIF (Cost, Insurance, Freight) means the seller also pays for insurance and freight to the destination port. For customs, the assessable value is based on CIF.

Can I import goods as an individual without a business?

Yes, individuals can import for personal use, but you still need an IEC and must pay applicable duties. However, commercial imports require a business and GST registration.

What are the penalties for non-compliance?

Penalties can include confiscation of goods, fines up to 100% of the duty evaded, and in severe cases, prosecution. Under the Customs Act, misdeclaration can lead to penalties under Section 111 and 112.

How do I find the correct HS code for my product?

You can search the Indian Customs Tariff online or use the ICEGATE portal. Alternatively, a customs broker can help identify the correct code. Getting it wrong is costly, so it’s worth the effort.

Can I claim a refund if I paid excess duty?

Yes, you can file a refund claim under Section 27 of the Customs Act within one year of payment. You need to provide evidence of the excess payment.

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in t | Assessable Value (INR) | - | 100000 | 0
in d | Basic Customs Duty (%) | - | 10 | 0
in i | IGST Rate (%) | - | 18 | 0
in s | Social Welfare Surcharge (%) | - | 10 | 0
out total | Total Duty & Tax (INR) | - | t*(d/100) + t*(d/100)*(s/100) + (t + t*(d/100) + t*(d/100)*(s/100))*(i/100) | 2
out bcd | Basic Customs Duty (INR) | - | t*(d/100) | 2
out sws | Social Welfare Surcharge (INR) | - | t*(d/100)*(s/100) | 2
out igst | IGST (INR) | - | (t + t*(d/100) + t*(d/100)*(s/100))*(i/100) | 2