Assessable Value Calculation: A Comprehensive Guide To Customs Valuation

As an importer, you must aware of the Assessable value, CIF value, and other value calculations.

Therefore why here I covered everything you need to know.

Hello, friends welcome to another fresh article from “IndianCustoms.Info”. This article explains how to calculate the Assessable value, IGST Assessable Value, customs duty, and Landed value.

Once when I search on Google to know the latest method to calculate AV. I did not find any updated calculation method.

After checking lots of sites, I came to know that all the sites provided an old method of assessable value calculation.

Wasting lots of time on the internet I come to know that On 26th September 2017, the calculation method of AV was changed.

But still, none of the sites updates the new method of assessable value calculation.

So, I decided to explain the new method of AV calculation in this blog.

Assessable value calculation is a crucial part of the customs valuation process.

It determines the value of imported goods to assess customs duty, import/export duty, and other charges.

I’m sure that this article will solve all your queries regarding the Assessable value, CIF value, IGST assessable value, customs duty, Landed value calculation, etc…

This article contains all the methods of calculating values covered under import customs clearance.

What is Assessable Value Calculation?

Assessable value is the value of imported goods to calculate customs duty and other charges.

It includes the transaction value of the goods, plus any additional costs incurred during transportation, insurance, and other related expenses.

Assessable value calculation is the process of determining the value of imported goods for customs purposes.

Factors Affecting Assessable Value Calculation

Several factors can affect the assessable value calculation, including:

1. The transaction value of the goods
2. Related expenses, such as transportation and insurance costs
3. Currency exchange rates
4. Discounts and rebates
6. Commissions and brokerage fees
7. Packaging and container costs
8. Any additional charges incurred during the importation process

Understanding these factors is essential for optimizing your import/export business and minimizing your customs duty and other charges.

Now let’s move on to the method of assessable value calculation.

Assessable Value Calculation For Customs.

Before calculating assessable value you to understand the Incoterms of your shipment.

In customs, an assessable value is calculated for the calculation of customs duty.

Assessable value = Cost + Insurance + Freight+ Handling charges. to calculate the AV, You need to calculate the CIF value.

As per Circular 39/2017-Customs, The CIF value and Assessable value are the same.

(CIF) value is the actual value of the goods when they are shipped. As duties are calculated based on the CIF value, they must be calculated correctly.

To find CIF value, the freight and insurance costs are to be added. 20% of the FOB value is taken as freight. It Means Rs.1000.00. Insurance is calculated as 1.125% – Rs.11.25.

• Invoice Value = Rs.1000/-
• Insurance Value = Rs. 11.25/-
• Freight Value = Rs.200/-

Rs.1000 (Invoice Value) + Rs. 11.25 (Insurance Value) + Rs.200 (Freight Value) = Rs.1211.25/- (CIF value)

CIF value = Rs.1211.25/- (Assessable Value)

Note:- The above calculation is for FOB & Ex-Work shipments.

If you want to know the AV calculation method in Hindi you can also watch the below video or continue the read article.

In the above video, I explained how you can calculate the AV by using our Import Duty Calculator.

By using our Import duty calculator you can easily calculate the IGST Value, customs duty, Landed value, etc.

Import Customs Duty Calculation.

Customs duty is calculated based on AV. Here below I had explained the complete calculation process.

Before starting, you need to under what is the total customs duty and what is included in the total customs duty.

In normal imports, Customs duty is the total of BCS, SWS & IGST.

• BCD – Basic Customs Duty
• SWS – Social Welfare Surcharge
• IGST – Integrated Goods and Services Tax

If BCD (Basic Duty) is 10%, SWS (Social welfare surcharge) is 10%, and IGST is 18%

BCD:- Rs.1211.25/- (AV) x 10% = RS.121.125/- (Basic Duty).

SWS:- Rs.121.125 (Basic Duty) x 10% = Rs.12.1125/- (Social welfare surcharge)

IGST:- [Rs.1211.25 (AV) + Rs.121.125 (BCD) + Rs.12.1125/- (SWS)] x 18% = Rs.242.00775/- (IGST Amount)

Total Customs duty (Excluding IGST amount) = Rs.133.2375/-

Total Customs duty (Including IGST amount) = Rs.375.24525/-

You can also use our Import Duty calculator to calculate this value.

Also Read:- Faceless Assessment: Reality & Importance.

Calculation Of IGST Assessable Value.

IGST assessable value calculation is very simple.

To calculate IGST AV you need to add Assessable Value + Basic Customs Duty + Social Welfare Charges.

For Example:-

IGST value Calculation :- Rs.1211.25 (AV) + Rs.121.125 (BCD) + Rs.12.1125/- (SWS) = Rs.1344.4875/- (IGST Value)

Landed Value Calculation Of Customs.

If you have already calculated the AV and BCD, then Landed value calculation is very easy for you.

To calculate the Landed value, add the Assessable value (AV) and basic customs duty (BCD).

For Example:-

Assessable value (AV) = Rs.1211.25/- + Basic Customs Duty (BCD) = RS.121.125/-

Landed Value = 1,332.375 (LV)

Conclusion

Assessable value calculation is a critical component of the customs valuation process.

Understanding the factors that affect assessable value calculation and following the proper formula can help you optimize your import/export business and minimize your customs duty and other charges.

By following the expert tips provided in this comprehensive guide, you can ensure that your import/export business is successful and profitable.

FAQ On Assessable Value

What is the meaning of the term “Assessable Value” in the context of Indian customs?

Assessable Value is the value of goods determined for calculating customs duty in India. It is the transaction value of imported goods, which includes the price paid or payable for the goods when sold for export to India, adjusted by the provisions of the Customs Act, of 1962.

How is the assessable value of imported goods determined in India?

In India, the assessable value of imported goods is determined based on the transaction value of the goods, which is the price paid or payable for the goods when sold for export to India, adjusted for certain expenses and charges as specified under the Customs Act, 1962.

How does the assessment of the value of goods differ for exports and imports in India?

In India, for assessment of customs duty, the value of goods is determined differently for exports and imports. For exports, the assessable value is the transaction value of the goods, while for imports, it is the transaction value adjusted as per the provisions of the Customs Act, 1962, to include certain expenses and charges incurred in transporting the goods to the port of importation.

I hope now you understand the new method of AV calculation for import customs duty in India. Comment below if anyone has any suggestions or queries regarding the Assessable Value, IGST Value, and Customs duty calculation.

40 Responses

1. What is the scope of change in assessable value calculation in the future.

Assessable value calculation may change in the future but no guarantee for the same.

If there are any changes happen in the coming future I will update the same in this article.

Thanks & Regards
(IndianCustoms.Info)

2. Kiran kumar says:

Invoce amount in usd is 19528 dollar Invoice value cif inr is 1374771.20 freight is 44000 and insurance 1279 rs what is the assessable value please forward in mail

Mr. Kiran Kumar,

CIF value means “Cost, Insurance, Freight“.
In this case, You already have CIF value,
CIF value is your assessable value.

3. naveen says:

WE HAVE IMPORTED SEVERAL CONSIGNMENTS AND IN ALL CASES THE FREIGHT ( ACTUAL ) WAS CONSIDERED FOR CALCULATION OF AV. THIS WAS ABOUT 12-14% OF COST. IN ONE CASE IT WAS TAKEN AS 20%FOR THE PURPOSE OF CALCULATING AV ( THIS WAS A COURIER SHIPMENT). .THE ACTUAL FREIGHT WAS 2%.. WHAT COULD BE THE REASONS FOR CONSIDERING THIS HIGH FREIGHT FOR CALCULATING AV

Your clearing agent may use 20% of freight instead of the actual freight at the time of B.E filing.

4. Sambhav Jain says:

Dear Sir,
if i received a quotation in FOB value then how can i considered the value of ocean/air freight and insurance value.
Freight 20% of FOB value and insurance 1.125% is thumb rule or it is valid for calculate CIF value.

If you get FOB value and want to calculate CIF value then you need to consider freight as 20% of FOB value and Insurance as 1.125% of FOB value.

• Sambhav Jain says:

Sir, if calculate the price of CIF from FOB then from where i can get the custom dust of Import country.

• ravi trivedi says:

Dear Admin can you please share the notification or rule , in that its mention to add or calculate insurance and freight as 1.125% and 20c% freight ..

• Shameem says:

Is it kind of fixed formula to get CIF value? Can we use all the time to calculate?

• Yes, you can use this formula for all time.

5. Ikechukwu says:

Please what is the resent price of CIF for India

• Hi Ikechukwu,

Invoice value + Freight + Insurance + Mic (If any) = CIF value.

6. A Sikdar says:

Sir, Many times it is seen that there is substantial difference in actual import turnover data and data available with Income Tax Authority (as submitted by the CBEC under information sharing protocol). In one of my friends case, total import purchase is 3.62 crore, but data available with Income Tax Department-India shows that total invoice value is Rs.9.57 crore and assessable value post assessment is Rs. 57 Lakhs. IT authorities are asking repeated clarification on this point. He is in a fix how to clear this. Can you please elaborate on this? Thanking you in advance.

MAny time the assessable value is different them your CIF value, It’s because your actual freight is more than 20% of the Invoice value.

7. Ponraj says:

Hi sir,
I am very new to this industry.You have explained well such a way any new commer like me learn easily.
But I have a doubt.
What is FOB value ?
Who will give the Fob value ?
What’s the present custom duty for plastic products?

Thank you sir.

• Hi Ponraj,

FOB value means the value before adding Freight and Insurance charges. The standard duty of Plastic products is BCD: 15%, SWS: 10%, IGST: 18% this duty structure may be change according to your product.

8. Wap says:

Hello sir,
I want to buy a product so for custom charges the actual value of the product will be taken or the discounted price with which I bought?
Thank you

• HI Wap,

9. Girish jain says:

Dear Sir
if freight amount is 10000 basic+20% fuel surcharge(2000)+18% GST( 2160) then what value to be mentioned in BOE? either 12000(10000+2000) or 14160? as fedex put 14160 while dhl consider 12000 . what is actual concept.
as per my it should be only 12000 bcoz gst is tax & already in BOE there is GST on duty amount so it cant considered GST on GST.
& by this method BCD amount varies.
so please clear this concept. if there is any proof please publish.

• Hi Girish Jain,

At the time of customs clearance, CHA must enter the full value of freight mentioned in the freight certificate, it does not matter that value includes IGST or not.

10. Naga says:

Hi
I am trying to import goods from overseas
I have an offer with CIF, that means I have to pay customs against CIF ?
Is there any way We can exclude Freight and Insurance from Customs duty while importing as CIF?

• Hi Naga,

Freight and Insurance already include in CIF value, So, you need to pay customs duty on freight & insurance. there is no option to avoid it.

11. Murugaiyan S says:

I would like to clear my doubt in the Accounting scenario of Import of Goods. While booking the import of goods in the accounts book normally we credit the vendor (Foreign supplier) and debit the purchase in the INR value (INR calculating on basis of the exchange rate mentioned in the BE). Similarly, at the time of payment make to vendor, we debit the vendor and and credit the bank account (The amount mentioned in the bank statement, which has been considered as the payment in INR). The difference between the Purchase value and payment considered as exchange rate difference and accounting either the income or expenses in the profit and loss A/c.

Here, my doubt is, during the calculation of Purchase value whether I need to include the Freight and insurance amount which have been mentioned in the BE. As you mentioned in the earlier message in the trail about the Assessable value (CIF), If I book the purchase value including freight and insurance then the cost of purchase will increase and automatically the difference will increase between the payment and the vendor Invoice value.

For examble: Vendor Inv. Value is 1000 USD and valued with exchange rate as mentioned in the BE is Rs.73/- Hence the purchase value is Rs.73000/- While paying the 1000 USD the exchange rate is 72/- So, we pay Rs.72000/- Difference Rs.1000/- Considered as indirect income. This is a entry we are following in the normal case without freight and Insurance.

Incase the freight and Insurance mentioned in the BE, and duty calculated on the assessable value, then How we need to account this entry. Please clarify my boubt and thanks in advance.

• Hi Murugaiyan S,

I’m not an accounting expert, I think you need to check with any other person who is an expert in the account. I’m very sorry……..

12. Venkatesh says:

Does packing charges given in indian currency added to assessable value?

• Yes, Packing charges are used for assessable value calculation.

13. Vinod says:

Please advise, freight amount will be mention in bill of entry with gst or without gst

• Hi Vinod,

I really appreciate the question you asked, it’s a very interesting question that everyone must know.

Freight amount should be mentioned in the bill of entry without GST.

14. A.S says:

I ordered something and it got delivered
Product Cost 399 USD and Air Courier Cost 64USD both given to the exporter
Incoterm DAP
My CBEXIII Form D was filed only for 399 USD as accessible value and not 399+64USD

Is this correct? or a mistake by Courier Company?
How can I get this corrected as I feel if this is a mistake, i have paid lesser duty.

• Hi A S
The correct assessable value for your shipment is 399 USD + 64 USD.

15. dealsauto41 says:

Informative post! This is a great share thank you

16. Pooja says:

Hello Sir,
I have received a shipment with invoice value 60000 euro with CIF Terms. I am also having discount in invoice of 10%(6000 euro). Plz confirm on what basis duty will be calculated, with or without discount?

• Hi Pooja,

Please use our Customs Duty Calculator to calculate the same.

17. Zeeshan says:

Greetings Sir,
I have to export a shipment of Rs680000/- for China.
How can I calculate Export Duty for the same, Kindly help.

You have immense knowledge and I am new to this.

• Hi Zeeshan,

Use our duty calculator.

18. kiran says:

Dear Sir,

If the freight amount is more than 20 % of the invoice value where shoud the additional freight amount should be shown in the BOE please advise

• Total freight amount you can see in the freight column.

19. Rishabh says: