Customs Duty – Calculation and Parameters – Part 2

By | December 24, 2025
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On what basis is the Customs Duty Calculated?

The final amount of duty payable is calculated based on the product’s classification (HS Code), value (typically CIF – Cost, Insurance, and Freight), and the country of origin, all of which are factored according to the Customs Tariff Act, 1975 and the Customs Act, 1962. Importers can use online tools such as the CBIC’s online Duty Calculator to estimate these costs accurately.

The payable Customs Duty is based on the following parameters:

  1. CIF value of the invoice
  2. H.S. Code
  3. Country of Origin
  4. Special Basis – as announced
    1. Ad Valorem – a tax on imported or exported goods calculated as a percentage of their value, not by weight or quantity
    • Example: This is the most common method, where duty is calculated as a percentage of the value of the goods (e.g., 10% of the CIF value).
      • Electronics: Mobile phones, laptops, and integrated circuits.
      • Automobiles: Motor cars and multi-utility vehicles.
      • Appliances: Refrigerators, air conditioners, and washing machines.
      • Machinery: Industrial equipment and spare parts.
      • Luxury Goods: High-end watches, perfumes, and designer handbag
  • 2. Specific Duty – a type of tax levied on imported or exported goods based on physical measurement—such as weight, volume, or unit count—rather than a percentage of the goods’ monetary value.
      • Example: Duty is levied based on a physical unit (weight, volume, or quantity) regardless of the product’s market value.
      • Natural Rubber: Often subject to a fixed rate per kilogram (e.g., ₹30/kg) or a percentage, whichever is higher.
      • Crude Oil: Historically subject to a fixed rate per metric tonne (MT).
      • Almonds: Levied based on weight (e.g., ₹35/kg for shelled almonds).
      • Gold and Silver: Often carry specific duty rates per 10 grams (for gold) or per kilogram (for silver).
      • Tobacco Products: Certain cigarettes or cigars are taxed based on length or quantity.
  • 3. Tariff Value – Tariff Value in customs duty is a fixed price set by the government for specific imported or exported goods, used as the basis for calculating ad valorem (percentage-based) duties.
      • Example: For products with highly volatile international prices, the government fixes a “Tariff Value” via notification (usually every fortnight). Duty is then calculated as a percentage of this fixed value, rather than the actual invoice price.
      • Edible Oils: Crude Palm Oil, RBD Palm Oil, and Crude Soya Bean Oil.
      • Brass Scrap: All types of brass scrap imports.
      • Poppy Seeds: Specifically those imported under specific HSN codes.
      • Areca Nuts: Fixed values to prevent under-invoicing.