What is the difference between Customs Duty and IGST?

Customs Duty is an import tax at the border, while IGST is GST applied on imported goods under India's GST system.

Is GST charged on imports in India?

Yes, imports are subject to IGST during customs clearance.

Can businesses claim IGST paid on imports?

Yes, eligible GST-registered businesses can usually claim IGST as Input Tax Credit.

How is import duty calculated?

Import duty is calculated based on assessable value and product HS code classification.

Does Customs Duty qualify for input tax credit?

Generally, Basic Customs Duty does not qualify for GST input tax credit.

Customs

Customs Duty vs IGST vs GST on Imports Explained (2026 Guide)

Understand the difference between Customs Duty, IGST, and GST on imports in India with practical examples, calculations, and import cost breakdowns.

9 min read

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Customs Duty is a tax charged on imported goods at the border, IGST is applied on imports under the GST system, and GST is charged mainly on domestic supply within India after import clearance.

Importing goods into India involves multiple taxes and duties, which often confuses new importers and businesses. Many people assume Customs Duty, GST, and IGST are the same, but they apply differently during the import process.

Understanding these charges is important because they directly affect landed cost, pricing, and profitability.

In this guide, we explain Customs Duty vs IGST vs GST on imports with simple examples, tax calculations, and practical insights for Indian businesses.

What is Customs Duty?

Customs Duty is a tax imposed by the Indian government on imported goods entering the country.

Collected during customs clearance
Based on HS code classification
Varies by product category
Managed by Indian Customs authorities

What is IGST on Imports?

IGST (Integrated GST) is charged on imported goods under India's GST framework.

Applied after customs duty calculation
Similar to GST on domestic goods
Input tax credit may be available
Collected during import clearance

What is GST?

GST is India's indirect tax system applied to goods and services sold within the country.

Applies to domestic transactions
Includes CGST, SGST, and IGST
Businesses can claim input credit

Customs Duty vs IGST vs GST

Factor	Customs Duty	IGST	GST
Applies On	Imported goods	Imported goods	Domestic sales
Collected By	Customs authorities	Customs authorities	GST authorities
Input Tax Credit	Usually no	Usually yes	Yes
Purpose	Import taxation	GST on imports	Domestic taxation

How Import Taxes Are Calculated

Import taxes are calculated step-by-step based on cargo value and applicable duty rates.

Assess customs value
Apply Basic Customs Duty (BCD)
Calculate IGST on total assessable value plus duty
Add additional cess if applicable

Import Tax Calculation Example

An importer purchases machinery worth ₹1,00,000 from abroad.

Tax Component	Example Amount
Assessable Value	₹1,00,000
Basic Customs Duty (10%)	₹10,000
IGST (18%)	₹19,800
Total Import Cost Before Local Expenses	₹1,29,800

What is Assessable Value?

Assessable value is the value used by customs for calculating import duties and taxes.

Includes product cost
Includes freight and insurance
Known as CIF value in many imports

Can Businesses Claim IGST Input Credit?

Registered businesses can usually claim IGST paid on imports as Input Tax Credit (ITC).

Helps reduce GST liability
Requires proper GST compliance
Not applicable for all import categories

Common Mistakes Importers Make

Ignoring landed cost calculation
Using incorrect HS codes
Confusing Customs Duty with GST
Missing IGST credit opportunities

Products with Higher Import Duties

Electronics
Luxury goods
Automobiles
Consumer appliances

India-Specific Insights

Import duties managed by CBIC
ICEGATE used for customs filing
HS code classification affects duty rates
GST input credit available for eligible importers

Process section

Step 1: Cargo Arrival & Documentation

Importer submits import documents through customs system.

Invoice
Bill of Entry
HS code declaration

Step 2: Customs Duty Assessment

Customs calculates applicable import duty based on cargo classification.

Assessable value calculation
BCD assessment

Step 3: IGST Calculation

IGST is calculated after customs duty is added to cargo value.

GST rate application
Tax verification

Step 4: Clearance & Input Credit

Importer clears cargo and may later claim IGST credit if eligible.

Duty payment
Cargo release
GST credit filing

Key Takeaways

Customs Duty and IGST are different import taxes
IGST is usually claimable as input tax credit
HS code classification directly affects import duty
Understanding landed cost improves import planning

Frequently Asked Questions

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