Freight Shipping between Vietnam and India | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from Vietnam to India?

Navigating the labyrinth of international duties and taxes might seem daunting, but with some key information in hand, you're well on your way to becoming a pro at estimating your import costs.

Estimating duties and taxes for your shipment from Vietnam to India requires a few key details: the country of origin, the HS (Harmonized System) Code of the goods, the customs value of the goods, and the applicable tariff rate. Further, each shipment may attract additional taxes and fees, so it's crucial not to overlook these.

Now that we have our checklist, let's begin with the most fundamental step. Identifying the country where the goods were manufactured or produced is imperative, as this forms the foundation of calculating your duties and taxes. Set out on a solid footing, and the journey of importing becomes a whole lot smoother.

Step 1 - Identify the Country of Origin

Knowing the Country of Origin, in this case Vietnam, is vital for a smooth importing process to India for five primary reasons.

First, a clear Country of Origin allows you to determine the appropriate Harmonized System (HS) code for your goods, an international nomenclature to classify traded products.

Second, it informs you about any prevailing trade agreements. For example, India and Vietnam are both members of the ASEAN-India Free Trade Area (AIFTA), which enables certain goods to be traded duty-free or at discounted rates.

Third, being aware of the Country of Origin helps to anticipate potential import restrictions. Some product categories from Vietnam, such as certain textiles, face restrictions in India.

Fourth, this knowledge can affect transport methods. Certain ports have direct transport links, which can influence cost and transit time.

Lastly, understanding the Country of Origin can identify potential additional costs, like anti-dumping taxes.

When importing, ensure you stay updated on the specifics of trade agreements and customs rules. A misstep could result in penalties or shipment delays, so attention to these details can save time and money in the long run.

Step 2 - Find the HS Code of your product

The Harmonized System Code, often simply referred to as an HS code, is a universal standardized numerical method used to classify traded products. The World Customs Organization has developed it to ensure trade happens seamlessly and uniformly at ports across 180+ countries worldwide.

If you're shipping goods, you'll likely come across the term HS code. Each traded product has a unique HS code associated with it that helps customs to recognize the nature of the product. This information is fundamental in determining import duties and taxes.

You might wonder how to find the HS code of your product. The simplest route is to ask your supplier. They're usually quite familiar with the commodities they're importing, and they understand the related rules and regulations well.

When directly consulting your supplier is not feasible, you can still find the HS code for your product with a few easy steps. By utilizing the Harmonized Tariff Schedule (HS lookup tool), you can get the necessary information.

1. Use this Harmonized Tariff Schedule to look for your product.
2. Type the name of your product into the search bar.
3. The HS code can be found in the Heading/Subheading column.

It's crucial to note the importance of accuracy when determining the HS code. Incorrect entry of HS Code can lead to shipment delays and potential fines, as customs authorities strictly observe these codes to monitor the inflow and outflow of goods.

Here's an infographic showing you how to read an HS code:

Step 3 - Calculate the Customs Value

Understanding customs value is crucial in managing your imports from Vietnam to India. Though it might seem like the value of your goods, customs value is a distinctive concept. In simple terms, it's the total cost of the goods you're importing, including the price of the goods (let's say, $10 per item), the international shipping costs (maybe $0.50 per item), plus insurance (another $0.20 per item).

So, the customs value for one item in this instance is $10 (cost of goods) + $0.50 (freight) + $0.20 (insurance) which totals $10.70. This CIF value forms the basis for customs clearance and calculating duties. By arriving at the accurate customs value, you can avoid unforeseen expenses, ensuring a smooth shipping process to India.

Step 4 - Figure out the applicable Import Tariff

Import tariffs are taxes imposed on imported goods. Specifically for goods imported into India from non-European Union countries like Vietnam, these tariffs play a significant role in determining the final cost of the product. The Central Board of Indirect Taxes and Customs (CBIC) in India classifies different types of tariffs such as basic, additional, protective, and others based on the product and its origin.

To identify the applicable import tariff for your product, follow these steps:

1. Visit the Indian Custom's website and enter the Harmonized System(HS) code of your product, which you'd have identified before this step.
2. After inputting the origin country as Vietnam, you'll be able to view the corresponding import tariff for your product.

Let's bring this to life with a practical example: You're importing ceramic tableware (HS Code: 69120010) from Vietnam. The import tariff rate offered is 20%. If your CIF (Cost, Insurance, Freight) is $10,000, your import duties would be $10,00020/100, which comes to $2,000. Therefore, the total cost incurred would be $12,000 ($10,000+$2,000). Always remember to cross-check current tariffs against up-to-date resources.

Step 5 - Consider other Import Duties and Taxes

When bringing goods into India from Vietnam, the Standard Tariff rate isn't the only potential cost. Depending on what you're shipping and its country of origin, additional duties and taxes might come into play, significantly impacting your bottom line.

For instance, certain commodities are subject to Excise Duty, an internal tax applied to specific goods. Anti-dumping duties are also feasible. If a product is being exported at a price lower than its natural value, leading to 'dumping,' this tax is imposed to protect indigenous industries.

However, the real game-changer can be VAT (Value-Added Tax), a tax applied at each value-addition stage in the goods' pathway. It's usually represented as a percentage of the product cost. In India, for example, VAT can range from 5 to 28% depending on the items (note: these rates are illustrative and actual rates may vary). If your product costs $1000, and VAT is 18%, that's an additional $180 to account for.

In essence, keep an eye out for these import duties and taxes - unforeseen expenses can sneak up making your shipping costs potentially higher than expected. Plan accordingly and leave room for these costs in your budget to maintain a healthy profit margin.

Step 6 - Calculate the Customs Duties

Calculating customs duties in India can be tricky, but you don't need to worry about it. There's a formula that involves the customs value of your goods, Value Added Tax (VAT), and possible anti-dumping taxes.

For instance, if your goods have a customs value of $10,000, and the customs duty is set at 7.5%, you'd pay $750 in duties - no VAT in this case.

In the second scenario, let's have the same customs value but add VAT at 12%, which works out to $1,200. So, you'd pay $1,200 in VAT plus $750 in customs duties, a total of $1,950.

Thirdly, imagine a situation where customs value and duty remain the same. However, now VAT, anti-dumping taxes (8%), and Excise Duty (10%) are added. You'd pay $1,200 in VAT, $800 in anti-dumping taxes, and an Excise of $1000 – this makes your total $3,750 in taxes.

Remember these calculations are mere estimates as rates can change. But don't let these complexities slow you down! Let FNM's Vietnam customs clearance services handle everything for you. Drop us a line for a free quote in less than 24 hours, and we’ll ensure you don’t pay a cent more than necessary.

Bill of Lading

Navigating customs between Vietnam and India demands a keen understanding of key documents; the Bill of Lading being at the helm. This powerful piece of paper is more than just an official shipping document, it's your golden ticket marking the change of ownership from supplier to your business. Imagine the Bill of Lading as the shipping world's 'proof of purchase'.

It often comes in two styles: the traditional paper version and the newer, more versatile electronic (telex) release. Choosing the teal electronic version can streamline your shipping process by allowing quicker access, reducing shipment delays. On the flip side, say your goods are taking the sky route – an Airway Bill (AWB) steps in, performing the same function as its ocean-going cousin.

Whichever your transport method, don't underestimate the power of these essential documents – they're your business's passport to successful international commerce.

Packing List

Ready to ship from Vietnam to India? Make sure you prepare your Packing List with utmost precision. It details the contents, weight, and packaging type of each item in your shipment, making it a must-have document for both sea and air freight. Think of it as a shopping receipt, listing every single product you've bought. Customs authorities, in both Vietnam and India, use this document to determine duties and ensure nothing prohibited is being shipped.

For instance, incorrect labeling or weight could invite trouble, including shipment delays or even fines. So, whether you're shipping electronics or apparel, double-check your Packing List for accuracy; it's one document you truly can't afford to get wrong!

Commercial Invoice

Shipping between Vietnam and India? Your Commercial Invoice is non-negotiable. It's a ticket for a smooth customs clearance, disclosing important details about your goods. It should precisely list product descriptions, seller and buyer's details, terms of delivery, the Harmonized System (HS) Codes, prices, and country of origin. Remember, accuracy is key here!

Any mismatch with your Packing List or Bill of Lading can cause delays, extra costs or even shipment seizures. For instance, if your Commercial Invoice mentions 'automobile parts' with HS Codes, make sure this matches across all your shipping documents. Follow this advice to avoid potential hiccups and fast-track your shipment. With meticulous documentation, you'll have your goods sailing smoothly from Hanoi to Delhi in no time.