Since customs duties are complex in Indian trade, this article aims to provide detailed information about import duties from China to India.
However, before delving into the specifics, it’s crucial to understand the fundamental steps involved in importing from China to India.
Keep reading.
How to import from China to India?
First, find a reliable product supplier or manufacturer in China to help you prepare the products.
Once you complete this step, connect with a trustworthy freight forwarding agent to handle import procedures and help you ship goods to India.
For importing samples, use door-to-door shipping services from courier companies. For heavier and larger goods, sea freight is the ideal option. In any case, selecting a reliable freight forwarder will simplify the entire process.
License requirements for importing from China to India
The import license needed depends on the type of goods you are shipping. If the goods are for personal use, no license is required.
However, if your cargo is intended for manufacturing or trading, you should apply for an Import Export Code (IEC). Usually, the Directorate General of Foreign Trade (DGFT) issues this 10-digit number.
To obtain the IEC, you must submit the necessary documents and pay a fee. Below are the required documents:
- PAN Card details
- List of business partners and their identity proofs
- Bank account statement
You can apply online through the official DGFT website by providing all the requested details.
Types of import duty from China to India
Customs duty
Integrated goods and services tax (IGST)
GST compensation cess
Social welfare surcharge
Countervailing duty (CVD)
Anti-dumping duty
Safeguard duty
Calculating duties and taxes
Typically, all cargo into India are subject to four primary types of duties and taxes:
- Basic customs duty
- Customs handling fee
- Integrated goods and services tax
- Social welfare surcharge
To grasp how to calculate each custom duty in India from China, you can examine specific examples below.
Let’s say you want to import 2,000 pieces of clothing into India, each worth INR 300:
Basic customs duty
To calculate BCD charges from China to India, use the following steps:
Formula: Total value of goods × BCD rate Calculation:
- Total value of goods: INR 300 × 2,000 = INR 600,000
- BCD rate for clothes: 20%
- Total BCD payable: INR 600,000 × 20% = INR 120,000
Therefore, you should pay INR 120,000 in customs duty to import 2,000 pieces of clothing from China.
Customs handling fee
First, add the insurance and freight costs to the total value of the goods, then multiply by the customs handling fee rate.
Formula: CIF value × Customs handling fee rate
Calculation:
- Insurance and freight cost: INR 2,000
- Total CIF value: (INR 300 × 2,000) + INR 2,000 = INR 602,000
- Customs handling fee payable: INR 402,000 × 1% = INR 6,020
So, the customs handling fee is INR 6,020.
Social welfare surcharge
To determine the social welfare surcharge, multiply the basic customs duty payable by the surcharge rate of 10%.
Calculation:
Social welfare surcharge payable: INR 120,000 × 10% = INR 12,000
Integrated goods and services tax (IGST)
To calculate IGST on imports into India, use the following formula:
(Value of imported goods + BCD + Social Welfare Surcharge) × IGST Rate
Example calculation:
- Value of imported goods: INR 600,000
- BCD: INR 120,000
- Social welfare surcharge: INR 12,000
- IGST rate for clothing: 12%
- IGST Payable: (INR 600,000 + INR 120,000 + INR 12,000) × 12% = INR 87,840
Thus, the IGST payable is INR 87,840.
List of goods exempt from customs duty
To obtain a duty exemption, the Central Board of Indirect Taxes & Customs (CBIC) requires you to apply for one of the following licenses:
- Advance License
- Special Advance License
- Value-Based Advance License
You can view the complete list of exempted goods and their specific requirements here.
How to pay import taxes in India?
India primarily utilizes ICEGATE for all import duty and tax payments.
Once you clear your import duties, your shipments will move through customs smoothly and reach their destination without issues.
India’s complex import duty regulations can be more challenging than those of countries like Singapore, the United States, or Hong Kong.
Understanding these basics is essential for preparing your business for seamless cross-border trade with India.
With over ten years of industry experience, our ASLG have learned that the intricacies of customs regulations often lead to shipment delays and fines due to customs violations.
To avoid these issues, partner with us! Our strong connections with customs authorities keep us informed about all customs changes, enabling us to expedite the customs clearance process for your shipments.
