GST and Duties Explained
- Nancy Kong
- Dec 2, 2025
- 3 min read
1. What Are Import Duties?
Import duties (also called customs duties or tariffs) are taxes charged by a country when goods enter its borders.These charges depend on the type of product, country of origin, and trade policies.
Why import duties exist:
Protect local industries
Generate government revenue
Control certain product categories (e.g., chemicals, electronics)
Common types of import duties:
Basic Customs Duty (BCD) – The primary tax on imported goods
Anti-Dumping Duty – For products priced too low, to protect local markets
Safeguard Duty – Temporary protection for domestic industries
Excise Duty – For specific categories such as alcohol or fuel
These duty rates are based on the HS code (Harmonized System code) of your product.
2. What Is GST?
GST (Goods and Services Tax) is a consumption tax charged on the supply of goods and services.Most countries charge GST (or VAT) on imported goods to ensure fair taxation.
Why GST is charged on imports:
To align imported goods with local tax rules
To prevent tax evasion
To ensure proper accounting in the supply chain
GST is typically calculated after duties are added, making the total taxable value higher.
3. How to Calculate GST and Duties
Most countries follow a similar formula for imports.
Import Duty Calculation Example
Import Duty = CIF Value × Duty Rate
CIF includes:
Product Cost
Insurance
Freight
GST Calculation Example
GST = (CIF Value + Duties + Other Charges) × GST Rate
A simple breakdown:
Add up CIF value
Apply duty rate
Add duty to the base value
Apply GST to the new total
This means GST is calculated on both the product value AND the duty, a detail many importers overlook.
4. What Other Charges Affect GST and Duties?
Depending on the country, the following may also be included in the taxable value:
Landing charges
Handling fees
Documentation fees
Brokerage fees
It’s important to ask your freight forwarder for a complete landed cost estimate.
5. GST Input Credit: Can You Claim It Back?
In many countries, businesses can claim GST Input Credit, meaning the GST you pay at import can be deducted from your tax liability later.
You can usually claim GST credit if:
You are a registered business taxpayer
The goods are for business use
You have proper documentation (e.g., GST invoice, import declaration)
Importers often recover this amount, making GST less financially painful than duties.
6. Duties vs GST — Key Differences
Feature | Import Duties | GST |
Purpose | Protect local industries | Tax consumption |
Refundable? | ❌ No | ✔ Yes, as input credit |
Based on | Product category (HS code) | Total taxable value |
Rate Variability | High | Usually fixed |
Understanding the difference helps you plan your cost structure more accurately.
7. How DDP Shipping Simplifies Taxes
With DDP (Delivered Duty Paid) services:
Duties and GST are included in the price
The freight forwarder handles the tax process
You avoid complex customs paperwork
Costs become predictable
Ideal for small businesses and new importers
DDP eliminates tax confusion and ensures compliance.
Contact Information
Whatsapp: +86-18098151030Nancy/+91-9952044576Mallesh Gujjala/+86-181 2571 3582Rose/+86-13416222617Jack/+86-15918480524CC/+86-18125730121Kimi
Email: nancy@gmrglobal.co
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Thank you for reading. I look forward to further communication with you! #GST #Customstaxes #Taxcalculation #GoodsandServicestax #shippingcosts