Import duty is a tax charged by a government on goods brought into the country, calculated from the customs value and classification of the goods, and payable during import clearance.
Import duty is a tax that a government charges on goods brought into its territory from abroad. It is one of the most important components of the landed cost of any import, and understanding it is essential for importers and B2B buyers who need to price accurately and source competitively.
Import duty is closely related to customs duty and tariffs. The tariff is the published rate schedule; the import duty is the actual amount charged on a specific incoming shipment under that schedule.
Import duty is levied by customs authorities when goods enter a country and are cleared for the domestic market. Governments use import duties to raise revenue, protect domestic industries and regulate the flow of specific goods. The applicable rate depends on the product's classification under the HS Code — in India, the HSN Code — and on the country of origin.
Import duty is usually calculated on the customs value of the goods, which typically reflects the transaction value on the commercial invoice and may include freight and insurance depending on the valuation method and Incoterms. Duty is charged in one of three ways:
In addition to basic import duty, imports may attract other charges such as domestic taxes, surcharges, or anti-dumping duties on unfairly low-priced goods.
India applies import duty using an eight-digit classification derived from the Harmonized System. A typical import may attract Basic Customs Duty plus other components and applicable taxes. Buyers sourcing from India and Indian importers of components should confirm the duty using the correct HSN classification and check whether a preferential rate applies under India's trade agreements.
The most powerful way to lower import duty is a trade agreement. When two countries share a free trade agreement, qualifying goods can enter at a reduced or zero rate, provided they meet the rules of origin and carry a valid Certificate of Origin. Duty-deferral schemes such as bonded warehouses and Special Economic Zones can also change when and whether duty is paid.
To avoid overpaying, classify products correctly under the HS or HSN system, declare an accurate customs value, check for applicable trade-agreement rates, and keep documentation consistent across the invoice, packing list and certificate of origin. Misclassification and incorrect valuation are among the most common causes of overpaid duty, delays and penalties.
Import duty is a central element of the cost of importing and a key factor in landed cost. Calculated from the classification, value and origin of goods, it can be reduced through trade agreements and managed with accurate documentation and duty-deferral schemes. Importers and B2B buyers who understand import duty can price confidently and source more competitively.