GST Rate vs Customs Duty: What's the Difference? (With Worked Example)

GST is the tax on goods sold inside India. Customs duty is the tax on goods crossing the border. But the moment you import something, you pay both. Below: when each applies, how they stack on imports, and a worked example with real numbers.

New importers and accidental SMB importers (somebody bought a 3D printer from China for the workshop, etc.) frequently ask the same question: I'm paying customs duty on this import — do I also have to pay GST? And the answer is yes, but not in the way people expect. Customs and GST are two distinct tax systems with different authorities, different rates, different forms. Here's the working separation.

The one-line difference

GST

A tax on the supply of goods and services within India. Charged by the seller, collected by the GST department.

Customs duty

A tax on goods crossing India's border. Charged at the port / customs station, collected by CBIC (the Indian Customs).

Side-by-side

Aspect	GST	Customs duty
When does it apply	Every supply within India — sale, transfer, lease, service.	Goods entering (import) or leaving (export) India.
Levied under	CGST / SGST / IGST Acts, 2017	Customs Act, 1962 + Customs Tariff Act, 1975
Components	CGST + SGST (intra-state) or IGST (inter-state)	Basic Customs Duty (BCD) + Social Welfare Surcharge (SWS) + IGST + Compensation Cess (if any)
Rate slabs	0% / 5% / 12% / 18% / 28% (HSN-based)	Varies 0-150% by HSN; most goods 5-30% BCD
Authority	GST Council / state-level GST officers	CBIC, customs commissionerates at ports/airports
Document	Tax Invoice / GSTR forms	Bill of Entry (imports) / Shipping Bill (exports)
Where the rate is found	GST rate notification, by HSN	First Schedule to the Customs Tariff Act (the ITC-HS)
Input credit	GST paid is claimable as ITC by registered buyer	BCD + SWS are NOT credit-eligible. IGST paid at customs IS claimable as ITC.

The big confusion: you pay both on imports

On an import, customs duty is the cost of the goods crossing the border. IGST is the cost of selling them to yourself inside India (you're treated as both importer and first buyer). They're computed on different bases, in a specific order, on the Bill of Entry. The order matters because each tax stacks on the value as expanded by the previous one.

Worked example: importing a ₹100 product

Suppose you import a gadget worth ₹100 (assessable value, CIF). The applicable rates are: BCD 10%, SWS 10% (of BCD), IGST 18%.

Assessable Value (CIF)	₹100.00
+ BCD @ 10% (on ₹100)	₹10.00
+ SWS @ 10% (on BCD ₹10)	₹1.00
Subtotal for IGST	₹111.00
+ IGST @ 18% (on ₹111)	₹19.98
Landed Cost	₹130.98

Of the ₹30.98 in taxes, ₹11 (BCD + SWS) is a sunk cost. The ₹19.98 IGST is recoverable as input credit if you're GST-registered and the goods are for business use.

Use our Import Duty Calculator to do this math for your specific HSN code in one click — it pulls the latest BCD rate from the Customs Tariff Schedule.

So when do you pay only one and not both?

Selling within India (B2B or B2C): GST only. No customs.
Exporting from India: Customs paperwork yes, but exports are zero-rated under GST — you can claim refund. Customs duty on most exports is zero or negligible.
Importing into India: Both. BCD + SWS + IGST stack as shown above.
Inter-state transfer of your own goods: GST (IGST) only, no customs (state borders aren't international borders).
SEZ / Bonded warehouse: Duty deferred until clearance for home consumption; no GST during the SEZ period.

Other duties you might encounter

Beyond the core BCD + SWS + IGST stack, imports can also attract:

Compensation Cess — on luxury / sin goods (aerated drinks, tobacco, large cars). Stacks on the IGST base.
Anti-Dumping Duty (ADD) — country-specific, on goods being dumped below fair value. Highly product-specific.
Safeguard Duty — temporary, when a sudden import surge threatens domestic industry (e.g., solar cells).
Agriculture Infrastructure & Development Cess (AIDC) — on specific items like petroleum, gold, alcoholic beverages.

For the full breakdown of how all components stack on imports, see our Import Duty India Explained with a worked example.

The pattern to remember

Customs duty asks: did the goods cross the Indian border? If yes, BCD + SWS apply at port.
GST asks: is there a supply within India? An import counts as a deemed supply, so IGST applies at port too. A domestic sale, intra- or inter-state, GST applies at invoice time.

So on imports you pay BOTH at the same time, computed in the order shown above. The IGST half is recoverable as input credit; the BCD/SWS half is not.

Tools that pair with this article

Import Duty Calculator — full BCD + SWS + IGST + Cess landed-cost calculator
GST Calculator — domestic GST math, forward and reverse
HSN Code Lookup — find the code that determines both rates
How to Find Your HSN Code (2026 Guide)