Import: Tariff Classification

Harmonized System (HS) Code

India uses the Harmonized Commodity Description and Coding System (Harmonized System or HS). The HS, used by more than 180 countries, is an internationally standardized system of names and numbers for classifying traded products and is maintained by the World Customs Organization (WCO). The code describes the type of the product, thereby easing the process of calculating its applicable taxes. The basic HS code consists of six digits: a four-digit heading plus two additional digits to form the subheading. Sub-subheadings (eight digits) provide greater specificity for many items; the maximum specificity is encoded in 10 digits. Individual countries can elect to use an eight- or 10-digit HS number for their customs purposes.

This code is the key by which duty rate is applied; it also indicates whether an import license or permit is required for a commodity. Therefore, it is important that the importer knows and uses the correct commodity code for the goods planned for import. To obtain the product code, the importer can contact the customs authority or other relevant authorities in the home country, or a forwarding agency.

In India, the HS code is published as the Indian Customs Tariff Book.

Most Favored Nation (MFN) Tariff

The Most Favored Nation (MFN) tariff rate applies to imports from all countries that use the HS and are not party to Free Trade Agreements (see Preferential Tariff System below). The customs duty tariff and the import/export requirements for the product are dependent on the HS code of the imported goods.

Preferential Tariff

The Preferential Tariff rate is used when partner countries have signed Free Trade Agreements (FTA) and Economic Partnership Agreements (EPA) with each other. In the Preferential Tariff system, the custom duties are lower or totally eliminated for selected imported goods originating from the FTA/EPA partner countries. India is also a beneficiary of bilateral trade agreements with Bangladesh, Bhutan, Sri Lanka, the Maldives, and Nepal.

Generalized System of Preferences (GSP)

The Generalized System of Preferences (GSP) is a non-contractual instrument by which industrialized (developed) countries unilaterally and based on non-reciprocity extend tariff concessions to developing countries.

The following countries or entities extend tariff preferences under their GSP schemes:

United States of America
New Zealand
Belarus
European Union
Japan
Russia
Canada
Norway
Australia
Switzerland
Bulgaria

GSP schemes of these countries detail sectors/products and tariff lines under which benefits are available, including conditions and procedures governing benefits. These schemes are renewed and modified from time to time. Normally, the customs of GSP-offering countries require information in Form A (prescribed for GSP Rules Of Origin) duly filed by exporters of beneficiary countries and certified by authorized agencies.

Note: The above information is subject to change. Importers and exporters are advised to obtain the most current information from a customs broker, freight forwarder, logistics professionals, or local customs authorities.

Source: Central Board of Indirect Taxes and Customs