How the landed price of a bulk chemical is built up in India

The answer, up front

A landed price is a stack, and the stack has a fixed order. For a domestic purchase: the ex-works price of the material, plus packing, plus loading, plus freight, plus in-transit insurance, plus unloading, plus GST on the taxable value — and then, for most buyers, minus the GST again, because it is creditable. For an import: the price of the goods, plus freight and insurance to the place of importation, plus basic customs duty, plus any cess or surcharge, plus any anti-dumping duty, plus IGST computed on all of that, plus port, broker and inland charges — and again, minus the IGST for most buyers.

Three of those layers are where the real money hides, and none of them is the headline rate. The first is the basis on which the quantity is stated, because a tonne of one thing is not a tonne of another. The second is the delivery point, because freight on a bulk chemical to a distant plant is a line item in its own right and the two quotations in front of you may not include the same part of it. The third is whether the tax is a cost to you at all — for a registered manufacturer with taxable output it usually is not, and comparing two quotes GST-inclusive is simply the wrong arithmetic.

This article sets out the layers in the order they are built, says who carries each one as a matter of law where the law says anything, and flags the figures that have changed recently — because several of the numbers in circulation in Indian landed-cost spreadsheets are stale by three years or more, and three of them changed in September 2025.

This is a buyer’s guide to the structure of a price, not tax or legal advice, and it quotes no price, rate card, freight figure or market level anywhere. Where it names a statutory provision it says whose obligation that provision creates, because that is the part most often got backwards. Rates and instruments change: every statutory figure below is given with the instrument that sets it so that you can check whether it still reads that way.

Two quotations that look different and are not

Before any of the arithmetic, the comparison discipline. A quotation becomes comparable only once five things are pinned, and a trader who will not pin them is quoting something other than what you asked for.

1. The basis of the quantity. Caustic soda lye is conventionally traded on a 100% sodium hydroxide basis, so a rate “per tonne” may mean per tonne of solution or per tonne of contained NaOH, and those differ by roughly a factor of two for a 48% lye. Bleaching powder and hypochlorite are compared on available chlorine, surfactants on active matter, and hydrated salts on the hydrate actually supplied. No instrument sets a pricing basis for any of them — it is trade convention, which is precisely why it has to be written down.
2. The delivery point, in words rather than a three-letter code. Ex-works the supplier’s gate, free on road at your gate, and delivered-and-unloaded are three different prices for the same material.
3. The packing, and whether it is returnable. A price in drums and a price in a road tanker are not the same price even before freight.
4. The tax rate and the HSN code the supplier will invoice under, because the rate follows the classification and the classification is the supplier’s declaration, not yours.
5. The payment terms. A thirty-day price and an advance price are different numbers, and under the GST valuation rules interest or a late fee for delayed payment of consideration is itself part of the value of the supply — section 15(2)(d) of the Central Goods and Services Tax Act, 2017 puts it there expressly.

Only then compare, and compare pre-tax. The rest of this article is what sits inside each of those five.

The domestic build-up

Ex-works, and everything it leaves out

An ex-works price is the material standing in the supplier’s yard. Between that and your storage tank sit packing, loading, primary freight, in-transit insurance, unloading, and in some cases waiting or detention charges if your plant cannot take the vehicle when it arrives. Who bears each of those is settled mainly by the contract and by trade practice — though not entirely: the Sale of Goods Act, 1930 supplies defaults, including that unless otherwise agreed the expenses of and incidental to putting the goods into a deliverable state fall on the seller. Those defaults are displaceable by agreement, which is why the contract is still where this is decided. The Incoterms rules often used as shorthand are the International Chamber of Commerce’s contractual rules, not Indian law — they bind because the contract adopts them.

So say it in words. “Delivered at your works, unloading in your scope, waiting beyond four hours chargeable at a stated rate” is a complete term. “FOR destination” on its own is not, and the gap is usually discovered with a tanker standing at the gate.

Packing, which is a cost and a constraint

Packing is rarely a large share of a bulk price, but it decides the minimum order, the handling cost at your end and sometimes the material you can accept at all. The practical ladder runs from 25 and 50 kg bags, through HDPE drums and carboys, to jumbo or FIBC bags, to a road tanker. Each step down in packing cost is a step up in minimum quantity and in what your plant has to be able to receive. A tanker of lye needs a receiving tank, a pump or gravity arrangement and someone competent to break the connection; a drum needs a forklift and somewhere to put the empties.

For packagings used to carry dangerous goods there is a formal performance-certification route in India: the Indian Institute of Packaging, an autonomous body under the Ministry of Commerce and Industry, carries out UN performance certification for metal and plastic drums and jerricans, composite and fibreboard drums, corrugated boxes, paper, plastic and woven bags, wooden and plywood boxes, flexible intermediate bulk containers and IBCs, with drop, leakage and hydraulic-pressure testing. Worth knowing because the certification has a shelf life: a UN certificate is issued for a stated term, and the terms available are shorter for a manufacturer that does not hold ISO certification than for one that does. We are not going to put a number on either here, because the Institute’s own current procedure and its older web material do not agree and we could not reconcile them. The practical consequence does not depend on the number: if your specification requires UN-certified packaging, the question is not whether the packaging type is certified but whether the certificate covering the packaging you are being offered is in date — so ask for the certificate and read the expiry.

We deliberately name no Indian Standard number for drums, carboys or FIBCs in this article. The number most often circulated as the HDPE drum standard, IS 11652, is in fact a textiles standard for woven sacks for 50 kg cement, and we were unable to confirm the current editions of the FIBC and transport-container standards that appear in the Institute of Packaging’s own test schedule. If a packaging standard is going into your purchase order, get the number and the edition from the Bureau of Indian Standards rather than from a quotation.

Returnable packaging, and the deposit

Where drums or IBCs are returnable, the commercial arrangement is usually a deposit refunded on return in sound condition. On the tax treatment, the only thing that can be said with confidence is the statutory starting point: the proviso to section 2(31) of the CGST Act provides that a deposit “shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply”. The words doing the work are “unless the supplier applies” — so forfeiting a deposit against drums that never came back, or adjusting it against an invoice, is the event that changes the analysis. We are not aware of a circular or advance ruling dealing squarely with returnable chemical packaging, and we have not searched the advance-ruling output exhaustively, so treat this as a point to put to your own adviser and to settle in the contract, not as a settled position.

The quantity: net, gross and what the law requires to be declared

Two distinct things get confused here — the commercial settlement of weight, and the statutory declaration on the package.

On the declaration. Under the Legal Metrology (Packaged Commodities) Rules, 2011 a retail package must declare the net quantity in standard units under rule 6(1)(c), while a wholesale package is governed by rule 24, which requires the name and address of the manufacturer or importer, the identity of the commodity, and either the number of retail packages inside or its net quantity. And rule 3 takes three categories out of the retail-package chapter altogether: packages containing more than 25 kg or 25 litres; cement, fertiliser and agricultural farm produce in bags above 50 kg; and packaged commodities meant for industrial or institutional consumers.

Two traps in that sentence, both of which cost people money. First, a 25 kg bag is not a package of more than 25 kg, so the first limb does not reach it. Second, the industrial-consumer limb is not automatic: the definitions in rules 2(bb) and 2(bc) as they now stand require the package to bear the declaration “not for retail sale”, and the institutional limb additionally requires the goods to be for use by that institution and not for commercial or trade purposes.

There is a third point in those definitions that matters specifically when you are buying from a trader rather than a producer, and it runs in the buyer’s favour: an industrial consumer is defined as one who buys directly from the manufacturer or from an importer or from a wholesale dealer. So buying through a trading company does not by itself take the supply outside that limb.

These Rules are amended often, and the position stated here is as at October 2026. The most recent amendment we could verify is G.S.R. 778(E) of 23 October 2025, which deals with medical devices and leaves rule 3 untouched; a 2024 proposal to extend the Rules to bagged commodities of any quantity in retail — while expressly retaining the industrial and institutional exclusion — was still a proposal on the material we could reach. Check before you rely on it.

On the commercial settlement of a bulk weight, the honest answer is that you have to agree the terms yourself. The Legal Metrology Act, 2009 requires a weight or measure used in a transaction to be verified and stamped before use, and penalises the use of an unverified one — which is the right question to ask about the weighbridge, whoever owns it. Beyond that, whose weighbridge governs, how tare is established, and what difference is tolerated before the load is disputed are commercial terms. Agree them before the first vehicle, not during the argument about the third.

Freight, and the question that actually decides the tax

Road freight is where a landed-cost spreadsheet most often goes wrong, because the GST treatment turns on a question most buyers never ask: who contracts with the transporter.

If the supplier arranges delivery, the freight is part of the supplier’s own supply. Section 15(2)(c) of the CGST Act includes in the value of a taxable supply “incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply” and any amount charged for anything done by the supplier in respect of the supply at or before delivery; and section 2(30) with section 8(a) taxes a naturally bundled supply at the rate of the principal supply. Showing freight and packing on separate lines of the supplier’s invoice does not take them out of the taxable value of the chemical.

If you contract the transporter, that is a separate supply of transport services, and three things follow.

• It may not be a goods transport agency supply at all. Notification 12/2017-Central Tax (Rate) exempts transport of goods by road except by a goods transport agency or a courier agency, and the definition of a goods transport agency turns on the issue of a consignment note — the definition was substituted again with effect from 22 September 2025, and describes a person providing road transport of goods who issues a consignment note, while excluding electronic commerce operators by or through whom local delivery services are provided. That exclusion is about e-commerce operators, not about short-haul carriage generally — local delivery by an ordinary road transporter that issues a consignment note is still a goods transport agency supply. A truck owner who issues no consignment note is not a goods transport agency, and the transport may fall outside the goods transport agency entries altogether — but check the current text of both the definition and the exemption entry before relying on that, for the reason in the note below.
• Where it is a goods transport agency supply, the rate changed on 22 September 2025. Notification 15/2025-Central Tax (Rate) of 17 September 2025 substituted the figure 9 for the figure 6 in the with-credit option, and the Government’s own FAQ on the 56th GST Council decisions states that “transportation of goods by GTA will continue to be taxed at the merit rate of 5% with no ITC”, with the alternative being the standard rate with full input tax credit. Anyone still working with a 12% with-credit option is working from a pre-September-2025 rate card.
• And it may be your liability rather than the transporter’s. Under serial 1 of Notification 13/2017-Central Tax (Rate), tax on goods transport agency road transport is payable by the recipient where the recipient is, among others, a factory registered under the Factories Act, 1948, a body corporate, a partnership firm or any person registered under the GST Acts — and the explanation treats the person who pays or is liable to pay the freight as the recipient. Since 18 July 2022 there is a proviso: the reverse charge does not apply where a registered goods transport agency has opted to pay under forward charge and has issued a tax invoice with the prescribed declaration.

The practical consequence for a buyer is small but real: where freight comes to you under reverse charge, you pay that tax to the Government yourself rather than to the transporter, you claim it as credit on the usual conditions, and the cash-flow timing is different from a freight bill with tax on it. None of which changes the comparison between two suppliers — but it does change which of them has to do the paperwork, and it is worth knowing which position you are agreeing to.

One widely repeated exemption no longer exists. The entries exempting a single carriage up to 1,500 rupees of consideration and a single-consignee charge up to 750 rupees were omitted by Notification 4/2022-Central Tax (Rate) of 13 July 2022, with effect from 18 July 2022, and the consolidated text shows them struck out with that footnote. They are still quoted on freight bills. Separately, we were not able to read Notification 16/2025-Central Tax (Rate) of 17 September 2025, which amends the exemption notification, so do not take the current exemption position for small or unregistered-recipient freight from this article without checking that instrument.

The e-way bill, and one Gujarat-specific point

Rule 138(1) of the CGST Rules, 2017 puts the obligation on “every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees”, with a proviso allowing one to be generated voluntarily below that value. Validity is one day per 200 km, not per 100 km — Notification 94/2020-Central Tax of 22 December 2020 substituted 200 km for 100 km in the rule 138(10) table with effect from 1 January 2021, and the official e-way bill developer release notes record the same change. The trap is that more than one official-looking copy of the rules online still carries the original 2017 text with the superseded validity table, so a careful person reading what looks like the obvious source can get the wrong answer. Take the validity from the amending notification.

For a buyer in Gujarat there is a further point worth knowing when comparing a local supplier with one further away. Under the Commissioner of State Tax’s notification GSL/GST/RULE-138(14)/B.19 of 19 September 2018, effective 1 October 2018, no e-way bill is required for intra-city movement of all goods at any value in Gujarat, and the same notification exempts intra-State movement of hank, yarn, fabric and garments for job work. The invoice, delivery challan, bill of supply or bill of entry must still travel with the consignment. An Ahmedabad plant buying inside Ahmedabad is in a different compliance position from one buying from Vapi, which is not a price difference but is a friction difference.

Dangerous goods: the duty is the consignor’s — and the consignor may be you

This is the item most often described in a quotation as the transporter’s problem, and that is not the legal position — but it is also the item a buyer most often assumes is the seller’s, which is not always right either. Rules 129 to 137 of the Central Motor Vehicles Rules, 1989 govern the carriage of dangerous or hazardous goods by road, and rule 131 is headed the responsibility of the consignor. Before such goods are transported the consignor must ensure that the goods carriage is validly registered to carry them, that it carries first-aid, safety and antidote equipment, that the transporter or owner has full and adequate information about the goods, and that the driver is trained to handle the dangers — and must ensure that the information is accurate and sufficient to let the owner and driver comply with rules 129 to 137.

The duties that sit on the transporter and the driver are separate and additional. Rule 132 requires the owner to give the driver the relevant information in writing in the prescribed form — what the trade calls a TREM card, though the Rules use no such term — to verify that the consignor’s information is complete and consistent with the classification, and to ensure the driver holds the licence endorsement; rule 133 requires the driver to keep that written information in the cab and available at all times; rule 134 requires an emergency information panel on both sides and the rear, with the correct technical name of the goods in letters at least 50 mm high, the UN class number, the class label — the labels themselves are prescribed by rule 137, not by rule 134 — and emergency contact details; and rule 135 requires the owner to satisfy the consignor that the driver has been adequately instructed. Rule 132 also has the owner and the consignor jointly lay down the route for each trip. The driver’s qualification is not nominal either: rule 9 requires a three-day course at a State-recognised institute covering defensive driving and product safety, and a specific endorsement on the licence.

Now the part that matters most to a buyer, and it is not a comfortable one. Rule 131 binds whoever consigns the goods. On a delivered sale where the supplier books the vehicle and the movement travels on the supplier’s documents, the supplier is the consignor. But on an ex-works purchase where you book the vehicle yourself, do not assume the duty stays with the seller. The Rules do not define “consignor”, and whose duty rule 131 is on a given movement turns on who consigns the goods and whose documents the movement travels on — which on an ex-works sale can easily be you. The duties in question are not formalities: satisfying yourself that the carriage is validly registered for the goods and carries the required first-aid, safety and antidote equipment, that the transporter has full and accurate information about the material, and that the driver is trained for it. So settle in the contract who the consignor is, rather than discovering it after an incident. It is also a real reason why an ex-works price and a delivered price are not the same number.

So the useful move is two questions rather than one: ask your supplier who it treats as the consignor on the movement it is quoting, and what it does to discharge rule 131 — and then check whether the answer leaves that duty with you. A supplier that answers “the transporter handles it” has told you something about its own compliance. A buyer who books its own truck and assumes the same thing has told you something about its own.

Tankers: the limit is volumetric, and your chemical has a density

For petroleum-class liquids the Petroleum Rules, 2002 set hard limits, and they are worth knowing even where your material is not a petroleum product, because they shape the fleet that exists. Rule 64(3) caps a tank truck or semi-trailer at 25 kilolitres, and a tank trailer at 5 kilolitres; rule 66 caps a truck-plus-trailer combination at 15 kilolitres and forbids a trailer behind a truck of more than 12 kilolitres net capacity; rule 64(2) fixes net capacity at 97% of gross for Class A and Class B petroleum and 98% for Class C; and rule 73 requires two attendants on a vehicle carrying more than 5 kilolitres of petroleum other than Class C while in motion. Transport of Class A or Class B petroleum in bulk by road requires a licence under those Rules, and a tank vehicle must be of a type approved in writing by the Chief Controller of Explosives and built to the Third Schedule.

Those are volume limits, and that is the point for a chemical buyer. A dense liquid reaches the permitted gross vehicle weight long before it fills the tank, and a light one fills the tank long before it reaches the weight limit. So the “tanker load” in a quotation is not a fixed tonnage, and the freight per tonne follows whichever limit binds first. Ask for the tonnage, not the tanker.

Whether a road tanker carrying a non-petroleum chemical — lye, acid, hypochlorite — needs a licence under the Petroleum Rules at all depends on whether the material is petroleum within those Rules, and compressed gases sit under different rules again. We have not established the position for any particular non-petroleum chemical and do not assert one here. The rules cited above are cited for the vehicle limits they fix, which is what drives the economics.

The tax layer, and why it is usually not a cost

This is the single most valuable paragraph in this article for anyone comparing quotations. For a registered buyer making taxable supplies, the GST on an input is not a cost. It is input tax credit, recoverable under section 16 of the CGST Act, subject to the section 16(2) conditions — possession of a tax invoice or debit note, the supplier having reported it, actual receipt of the goods, the tax having actually been paid to the Government, and the return having been filed — and subject to the time bar in section 16(4), which is the condition that can turn a late-booked invoice into a cost rather than a credit. Treat that date as something to check rather than to remember: Parliament has twice legislated to relieve the bar for specified periods, most recently by inserting sub-sections (5) and (6) by the Finance (No. 2) Act, 2024, so the position is not as absolute as the sub-section reads on its own. So compare pre-tax: GST at different rates does not by itself make one quote dearer than the other. Compare GST-inclusive and you will sometimes pick the worse supplier.

But do not read that as meaning a rate difference can be ignored. If two suppliers quote different GST rates on what you asked for as the same chemical, the usual explanation is that they are not quoting the same thing: grade and description drive the classification, and the classification drives the rate. The September 2025 changes make the point — medicinal-grade hydrogen peroxide moved to the merit rate while other grades did not, so two offers of “hydrogen peroxide” at different rates can both be correct and are not the same product. Where a rate really is wrong, the recovery and interest run against the supplier that short-paid; the buyer’s exposure is to its credit, which is a narrower but less recoverable problem. Either way the answer is the same: pin the HSN code and the description before you compare, and treat a rate difference as a question to resolve rather than a difference that washes out.

And then the exceptions, because they are real and they are where the loss happens. GST on an input is a cost in four situations:

• Blocked credit. Section 17(5) lists credits that are not available at all, including goods lost, stolen, destroyed or written off, and goods given as gifts or free samples — which is worth remembering when a consignment is written off after a spill or a contamination.
• Exempt or partly exempt output. Section 17(2) restricts credit to the proportion used for taxable supplies, so a plant with exempt output carries part of the tax as cost.
• You are under composition. Section 10(4) provides that a composition taxpayer “shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax”, so the whole of the input tax is cost.
• Your seller is under composition. The same provision bars that seller from collecting tax at all, so no credit flows to you. A composition dealer’s apparently lower price is not necessarily a lower net cost — the tax you would have recovered from a regular supplier is buried in the price instead.

One drafting point on discounts, because a late discount can be worth less than it looks: under section 15(3) a discount is excluded from the taxable value only where it is given before or at the time of supply and recorded in the invoice, or where it is established by an agreement entered into at or before the supply, linked to specific invoices, and the recipient has reversed the corresponding credit. A volume rebate agreed afterwards and settled by a credit note sits outside those conditions unless it was papered in advance.

Withholding on a purchase of goods: TDS now, not TCS

This changed twice in two years, and a seller still showing the old line on a chemical invoice is wrong. The seller-side tax collected at source on sales of goods under section 206C(1H) of the Income-tax Act, 1961 was withdrawn with effect from 1 April 2025 — the Income Tax Department’s own summary of the Finance Act, 2025 says so in terms, and adds that the cross-reference to it was removed from the buyer-side provision.

From 1 April 2026 the Income-tax Act, 2025 replaces the 1961 Act, so for the current financial year the operative provision is a different one again. Section 393(1) of the 2025 Act, at serial 8(ii) of the table, requires a buyer to deduct 0.1% on any sum exceeding fifty lakh rupees for the purchase of goods, with the deduction computed on the sum exceeding that threshold, and switched off where tax is deductible or collectible under any other provision of the Act. Section 394, the collection-at-source provision, has no general sale-of-goods entry at all. So on a large chemical purchase the withholding obligation sits on the buyer rather than the seller — with one open question we flag rather than answer, because it decides whether a smaller buyer has any obligation at all: whether a buyer-turnover threshold attaches to that entry. The ten-crore condition familiar from the old provision does not appear on the face of the new one in the official text we read, and we are not going to assert it either way. It is not a cost to either — it is an advance against the seller’s income tax — but it is a cash-flow item and a reconciliation item, and it belongs in the purchase order rather than in a surprise.

Two honest limits on that paragraph. We could not establish whether a buyer-turnover threshold applies to that entry — the familiar ten-crore condition from the old provision does not appear on the face of the new one in the official text we read, and we are not going to assert it either way. And section 394 does contain a limb for goods notified by the Central Government above ten lakh rupees, so a notified chemical could in principle come back into collection at source; we did not find any such notification and did not verify its absence. This is a question for your own tax adviser, and the one thing worth taking from it is that a 2024-vintage invoice template is out of date.

The import build-up

If you import directly, or if your supplier does and you want to understand the number it quotes you, the stack is longer and the order matters, because each layer is computed on the layers below it.

Assessable value, and the most common stale figure in Indian landed-cost spreadsheets

Section 14(1) of the Customs Act, 1962 makes the value of imported goods the transaction value — “the price actually paid or payable for the goods” when sold for export to India, delivered at the time and place of importation — where buyer and seller are unrelated and price is the sole consideration. The first proviso requires the value to include, as the rules prescribe, commissions and brokerage, engineering and design work, royalties and licence fees, the cost of transport to the place of importation, insurance, and loading, unloading and handling charges.

Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 then does the work. Rule 10(1) adds commissions and brokerage other than buying commissions, the cost of containers and of packing, apportioned buyer-supplied materials and outside-India design work, royalties and licence fees payable as a condition of sale, and other payments made as a condition of sale — and the Explanation makes royalty and process payments addable even if the goods are processed after importation, which catches anyone importing an intermediate under a technology licence. Rule 10(3) requires additions to rest on objective and quantifiable data, and rule 10(4) bars any addition not provided for.

Now the stale figure. Spreadsheets and quotation templates across the trade still add landing charges of 1% of the CIF value to reach assessable value. That addition was removed in 2017. The Rules were amended by Notification 91/2017-Customs (N.T.) of 26 September 2017, and the Board’s Circular 39/2017-Customs of the same date explains the effect: loading, unloading and handling charges associated with delivery at the place of importation are no longer added to the CIF value, and only charges for delivery to the place of importation remain includible — the circular relying on the Supreme Court’s position that landing charges must reflect actual charges rather than a notional percentage. If a landed-cost working in front of you has a 1% landing-charges row, it is overstating the duty base and every duty computed on it.

A caution that applies to us too. The text of rule 10(2) we were able to read is the pre-2017 version, which still contains the superseded 1% proviso — several widely used online copies of the Rules have not been updated. That version also carries the defaults applied where freight or insurance cannot be ascertained, and a ceiling on air freight. We are therefore not quoting those percentages here, because we could not read them in a current official text. What a buyer needs to know is that those deeming provisions exist: where freight or insurance to the place of importation cannot be ascertained — common enough on an FOB purchase — the Rules supply a figure, and there is a separate ceiling for goods imported by air. Take the percentages from the current text of rule 10(2) and not from a spreadsheet, ours included.

The duty stack, in order

On the assessable value sit, in sequence: basic customs duty at the First Schedule or notified concessional rate; the Agriculture Infrastructure and Development Cess where it applies, levied by section 124 of the Finance Act, 2021 as a duty of customs in addition to other customs duties; Social Welfare Surcharge; any anti-dumping or countervailing duty; and then IGST.

Two things about that order are regularly got wrong.

• IGST is not charged on the CIF value. Section 3(8) of the Customs Tariff Act, 1975 fixes the base as the assessable value plus the duty of customs and any other sum chargeable as an addition to the duty of customs, excluding only the integrated tax itself and the compensation cess. So IGST sits on top of basic customs duty, the cess, the surcharge and any anti-dumping duty. The linkage to the domestic rate is statutory: the proviso to section 5(1) of the IGST Act, 2017 and section 3(7) of the Customs Tariff Act together charge integrated tax at the rate applicable to a like article supplied in India, and the GST Council’s own FAQ states that the IGST on imported goods is the rate notified in the rate notification. A domestic GST rate change is an import landed-cost change on the same day.
• Social Welfare Surcharge is not 10% of the whole duty bill. Section 110 of the Finance Act, 2018 levies it at 10% of the aggregate of duties, taxes and cesses levied and collected under section 12 of the Customs Act and any sum chargeable under any other law, excluding safeguard duty, among others, safeguard duty, countervailing duty under section 9 of the Customs Tariff Act, anti-dumping duty under section 9A, and the surcharge itself. So a consignment carrying anti-dumping duty does not pay the surcharge on that duty. And the surcharge has not been abolished: the Budget 2026-27 customs documents continue to add to and remove from its exemption notification, which is not what happens to a levy on its way out.

Two questions in this area we could not settle and will not pretend to. Whether the Social Welfare Surcharge is computed on basic customs duty alone or on basic duty plus the Agriculture Infrastructure and Development Cess is not stated in the instruments we could read. And whether the surcharge falls to nil where basic duty is nil or exempt is contested rather than settled — the Board’s circular position, as recorded in High Court litigation, is that the surcharge is not exempted by an exemption of customs duty, and the earlier decisions often cited the other way have been held to have been decided without regard to binding authority. Anyone building a nil-duty import case on a nil surcharge needs advice, not a spreadsheet.

IGST on ocean freight: what the Supreme Court actually decided

The short version in circulation is that the Supreme Court abolished IGST on ocean freight. The accurate version is narrower and the difference is commercially material. In the Mohit Minerals appeals, decided on 19 May 2022, the Court confined the question before it to CIF contracts. And it did not hold that the importer was the wrong person to tax — on the contrary, it concluded that the importer of such goods would be the recipient of the shipping service, and that the notification naming the importer as that recipient was clarificatory on the point. What it struck down the levy for was different: a CIF supply of goods is a composite supply with the goods as the principal supply, so a separate levy on the service element offends the composite-supply scheme of the GST Acts. High Courts since have treated the position as settled for CIF, have ordered refunds, and — in an Andhra Pradesh decision of August 2025 — have rejected the revenue’s argument that the ruling operates only prospectively, holding that “any judgment, declaring the law, would operate both retrospectively and prospectively”.

Where an Indian importer buys FOB and contracts the ocean freight itself, the composite-supply reasoning does not apply on its face, and we are not going to tell you what the position is, because the judgment confines its own question to CIF. That is a question for your adviser on your facts. What is worth taking from it is structural: the Incoterm you buy on is not only a cost allocation, it can change the tax analysis.

Two further corrections to the way this case gets cited. It was not struck down for excessive delegation — the Court said expressly that the notification could not be struck down on that ground, and the argument failed. And the conclusion from that judgment most often quoted in entirely unrelated contexts is a different one: that the recommendations of the GST Council are not binding on the Union and the States and were intended to have persuasive value only.

Anti-dumping duty: product-specific, origin-specific, and it expires

Anti-dumping duty is the layer most likely to make an otherwise competitive import uncompetitive, and the one most often misdescribed. Under section 9A of the Customs Tariff Act the designated authority recommends after an investigation. That investigation is normally initiated on a written application by or on behalf of the domestic industry, but the Rules also let the authority initiate of its own motion where it has sufficient evidence, from a Commissioner of Customs or from another source — so an industry application is not the only route. Final findings are due within a year of initiation, which the Central Government may in special circumstances extend by a further six months; the Central Government then imposes the duty by notification in the Official Gazette, which must be laid before both Houses of Parliament. The duty cannot exceed the margin of dumping, a provisional duty may be collected pending final determination with the excess refunded, and the duty ceases to have effect on the expiry of five years from imposition unless revoked earlier, extendable by a further five years only after a review finding that cessation would be likely to lead to a continuation or recurrence of dumping and injury.

So three questions decide whether it hits you: the product, the country of origin, and the date. A duty in force against one origin says nothing about another, and a duty you remember from four years ago may have lapsed. We quote no anti-dumping rate for any chemical in this article — the rates are product-and-origin specific, they change, and the only safe source is the current notification. Ask your supplier for the notification number it is relying on, whether it is claiming the duty applies or does not.

The exchange rate, which is two different rates

An import has a currency conversion in it twice: once for duty, once for payment. For duty the rate is the notified customs rate in force on the date the bill of entry is presented — the final proviso to section 14(1) of the Customs Act says so. How that rate is published changed on 4 July 2024. The Board’s Exchange Rate Automation Module, introduced by Circular 07/2024-Customs of 25 June 2024, dispensed with notifying the rates by notification; rates for 22 currencies are now published on the ICEGATE portal on the evening of the first and third Thursdays of each month and take effect from midnight of the following day. Anyone describing a numbered exchange-rate notification as the current mechanism is working from pre-July-2024 guidance.

Worth knowing about the rate itself: under the superseded notifications there were always two columns, a rate for imported goods and a lower one for export goods, and some currencies were quoted per 100 units rather than per unit. The rate your bank gives you on the remittance is a third number again. A landed cost that uses one exchange rate for both duty and payment is approximate by construction, which is fine so long as nobody treats the output as exact.

Port, clearance and the two clocks

Between the vessel and your gate sit charges from at least four counterparties: the port, the terminal, the shipping line and the customs broker. Two structural points save more money than any rate negotiation.

First, find out how many published tariffs apply to your berth, because it is not always one. A major port authority frames and publishes a scale of rates, and it ordinarily covers both sides of the operation in separate chapters: vessel-related charges such as port dues on tonnage, pilotage and towage, berth hire and shifting, and cargo-related charges such as wharfage, demurrage, storage and handling. Where the berth or terminal is run by a concessionaire rather than by the port authority, that operator publishes a tariff of its own — a different document, from a different body, on a different revision cycle. That is the case at many of the container and liquid terminals a chemical consignment actually discharges at. So take the applicable tariffs from the specific port and terminal, with their effective dates, rather than from a generic landed-cost template.

Second, demurrage and detention are two different charges from two different parties, and a customs hold does not reliably stop either clock. Port or custodian storage is charged under a published tariff by the custodian of the customs area. Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 does oblige that custodian not to charge rent or demurrage on goods seized, detained or confiscated — but the obligation is expressly subject to any other law for the time being in force, and those opening words decide the question. The Supreme Court relied on them in Mumbai Port Trust v. Shri Lakshmi Steels (2017) to hold that the regulation does not override a major port’s statutory power to levy its rates, and that the importer is the party liable for the demurrage — even where the importer is not at fault. So assume custodian demurrage keeps accruing during a customs hold at a major port.

The same judgment leaves two routes open, and they are the actionable part of it. The Court said the importer must clear the goods by paying the charges due and then claim reimbursement from the customs authority — which it can recover only where it establishes that the authority’s action was mala fide, a high bar — and it noted that the importer may apply to the port’s board for exemption or remission of the charges under the Major Port Trusts Act. Neither is a defence to the bill; both are worth knowing before you treat the bill as final.

Container detention is a different charge again — levied by the shipping line for keeping its box beyond free time, as a matter of the carrier’s contract. We are not aware of any instrument applying the regulation’s relief, or an equivalent, to a carrier’s detention charge. The practical position is therefore the worst of both: two counterparties, two contracts, and a delay that is nobody’s fault still costs money on both. For a liquid chemical in a tank container that is the difference between an inconvenience and a serious number, which is why the free-time terms belong in the enquiry rather than in the arrival email.

Timing is a cost driver in its own right, and the rule here was reversed in 2021. Section 46(3) of the Customs Act, as amended by the Finance Act, 2021, requires a bill of entry to be presented before the end of the day — including holidays — preceding the day of arrival of the vessel, aircraft or vehicle, with mode-specific limits notified by the Board; it may be presented up to thirty days before expected arrival, and prescribed charges are payable for late presentation where the proper officer finds no sufficient cause. Anyone still working to the old rule — the end of the next day after arrival — is late on every sea consignment. Advance filing costs nothing; late filing can, unless the officer is satisfied there was sufficient cause.

And if the goods have to wait: two different warehousing regimes

These get called the same thing in conversation and they are not remotely the same thing.

Calling section 49 storage “bonding” in a landed-cost comparison is a category error, and the ninety-day interest clock on genuine bonded storage is the item that turns a deferral into a cost.

The customs broker is not just a filing agent

Worth knowing because it is leverage you already have. Regulation 10 of the Customs Brokers Licensing Regulations, 2018 requires a broker to obtain written authorisation from each client, to exercise due diligence as to the accuracy of the information it gives clients, to advise the client to comply with the Customs Act and allied laws and to report non-compliance to the Deputy or Assistant Commissioner, not to withhold any customs order, instruction or public notice relating to clearance from a client entitled to it, and to verify the client’s identity and the correctness of its importer-exporter code, GST registration and declared place of business against reliable independent documents. The obligation on public notices is a duty not to withhold rather than a duty to volunteer, but it is enough to found the question: ask your broker what has changed.

Incoterms: what the 2020 rules actually changed

Incoterms 2020 is a set of eleven three-letter rules published by the International Chamber of Commerce and in force since 1 January 2020. Three of the 2020 changes bear directly on cost and on risk, in the ICC’s own account of them:

• DAT became DPU, and the difference from DAP is who unloads — the seller unloads under DPU and does not under DAP. On a drummed or bagged consignment that is a real cost and a real labour question.
• CIF and CIP no longer carry the same insurance. CIF’s default cover remains Institute Cargo Clauses (C), while CIP now requires cover at the higher level of the Institute Cargo Clauses (A) or similar clauses. A buyer who accepts CIF believing it brings all-risks cover is covered on the narrower clauses.
• In the 2020 rules the costs associated with each rule are collected in one article of that rule, which is the single most useful practical change: there is now one place to read the cost allocation, although costs continue to appear in the individual articles as well.

Use the code as a label and the words as the contract. The per-rule allocation of obligations lives in the ICC’s own publication, and a three-letter code in an email is a reference to a document neither side may have read. Where it matters — and on a bulk chemical import it usually does — spell out who clears, who pays the duty, who unloads and who insures to what level.

Compliance items that are price, not paperwork

Four regimes turn up in bulk chemical buying as apparent price differences, and in each case the cheaper offer is cheaper because it is not the same offer.

• Quality Control Orders. For a growing list of chemicals, conformity to an Indian Standard and the Standard Mark are compulsory, not optional. The power is section 16 of the Bureau of Indian Standards Act, 2016, and section 17 prohibits a person without the Standard Mark or a valid licence from making, bringing in, distributing, selling, storing or displaying for sale goods covered by such an order — so an order binds importers, and the Bureau operates a foreign manufacturers certification scheme precisely so that overseas plants can be licensed. The Department of Chemicals and Petrochemicals publishes the chemical orders with the standard and the effective date: caustic soda has been under one against IS 252:2013 since S.O. 1468(E) of 3 April 2018, and the list runs to dozens of chemicals including acetic acid, methanol, hydrogen peroxide, ortho-phosphoric acid, methylene chloride, acetone and potassium carbonate, with further orders commencing on dated schedules. A non-marked offer of a chemical under a Quality Control Order is not a cheaper version of the same thing.
• Controlled substances. This is not only a pharma problem. The Narcotic Drugs and Psychotropic Substances (Regulation of Controlled Substances) Order, 2013 puts ordinary industrial chemicals — acetic anhydride, methyl ethyl ketone, potassium permanganate, phenylacetic acid and its salts, piperonal, isosafrole and safrole among them — under import control, so that importing one requires a No Objection Certificate from the Narcotics Commissioner, one per consignment, with shipping documents filed within seven days of import and records kept for five years. Several substances, acetic anhydride included, are additionally subject to registration, daily accounts, quarterly returns, consignment notes with tamper-proof seals for domestic movement, and sale only to holders of a valid registration number. None of that has to appear in a quotation — but a supplier who cannot describe the regime when you ask about it is a supplier to ask more questions of.
• Your own storage obligations. Where a hazardous chemical is stored at your site above the threshold quantity, the Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 put duties on you as the occupier: identifying major accident hazards and taking adequate preventive steps including information, training and equipment; approval and a site report before commencing the activity; an on-site emergency plan with a mock drill every six months; and safety data sheets and container labelling with contents, the manufacturer’s or importer’s name and address and the hazard data. The duties that attach to your site are yours, and no supplier discharges those — the labelling limb is the exception, since the container labelling is applied by the manufacturer or importer before the drum reaches your gate. They are also a real cost of taking a larger, cheaper delivery.
• Import policy and the port. The Directorate General of Foreign Trade amends the import policy schedule by notification, and those notifications can restrict not only whether a good may be imported but through which port. Free status and permitted port of entry are two separate checks, and a landed cost built on the wrong port of entry is not a landed cost.

What has changed recently, and what that does to an old spreadsheet

If your landed-cost model was built before late 2025, three of its rows are wrong and two more things have changed since. In rough order of how much money is involved:

1. GST rates moved on 22 September 2025. The 56th GST Council, meeting on 3 September 2025, recommended replacing the four-tier structure with a 5% merit rate and an 18% standard rate plus a 40% rate for a few de-merit goods. Among the changes the Council’s own release lists for industrial inputs: sulphuric acid, nitric acid and ammonia from 18% to 5%; man-made fibre from 18% to 5% and man-made yarn from 12% to 5%; medicinal-grade hydrogen peroxide and gibberellic acid from 12% to 5%; cement from 28% to 18%; and — in the other direction — coal, lignite and peat from 5% to 18%. Because import IGST follows the domestic rate, those are import landed-cost changes too.
2. Compensation cess came off most goods. The Council’s FAQ records that the cess levy was ended for goods other than the tobacco group and its rate merged into GST. A landed-cost template with a compensation cess row is stale for most goods.
3. Goods transport agency rates changed on the same date. The with-credit option moved from 12% to 18%, with 5% and no credit remaining the merit option.
4. Tax collected at source on sales of goods went, and a buyer-side deduction replaced it, under a new Income-tax Act that took effect on 1 April 2026.
5. Customs classifications for organic chemicals moved on 1 May 2026. The Budget 2026-27 documents record a tariffication exercise moving a long list of concessional entries into the First Schedule, and the Finance Bill creating 36 new tariff items and two amendments across headings in the 2915 to 2939 range from that date — the four-digit headings remain, so what changes is the eight-digit tariff item. Separately, chemical basic-duty concessions now sit in Notification 45/2025-Customs of 24 October 2025 rather than the notification the trade has cited for years. A quotation citing a pre-May-2026 eight-digit tariff item for an organic chemical may be citing a code that no longer exists.

A caution about all of the above, and it is a general one worth internalising. A GST Council press release is not an instrument. The Council’s release on its 57th meeting of 8 October 2026 says in terms that its recommendations are given effect through the relevant circulars, notifications or law amendments, which alone have the force of law; and the Supreme Court has held that those recommendations are not binding on the Union and the States. We have cited the Council’s release and FAQ for the rate changes above because that is what we could read primarily; we did not read the rate notifications themselves. Before you price against a rate, get the notification. That applies with particular force to the 57th meeting itself, whose recommendations were three days old when this article was written.

What a trader’s margin is, and what it should buy you

Velora is a bulk supplier and trader sourcing from qualified manufacturers, not a manufacturer, so there is a margin between what we pay and what we quote, and pretending otherwise would be insulting. The useful question is not whether the margin exists but what it is doing.

On a well-run trade it pays for things you would otherwise do yourself: finding a producer whose grade actually matches the application rather than the grade name, holding stock so that your plant is not buying a full tanker to cover a partial requirement, consolidating part-loads, carrying the credit period, and, where a particular contract puts the movement in our scope and says so, taking the consignor’s duties for that movement — which is a term of that contract rather than a general promise — and dealing with the documentation when a batch is queried. On a badly run one it pays for nothing and you are buying an invoice. The way to tell the difference at the enquiry stage is to ask the questions in the checklist below and see which ones get a straight answer.

We state no licence or registration position for Velora in this article. Where your application brings a licensing requirement — a scheduled or controlled substance, a food or pharmaceutical use, a petroleum-class liquid — tell us the application and we will confirm in writing whether we can supply against it. Require the same of any supplier, and do not accept a grade name as the answer.

The short version

Compare pre-tax, at the same delivery point, on the same basis of quantity, in the same packing. Four corrections to an ordinary quotation comparison do most of the work: state the quantity basis in words; state the delivery point and who unloads; strip the GST out of both quotes unless you are one of the buyers who cannot recover it; and ask for the tonnage rather than the tanker. After that, the layers that most often decide the outcome are freight to your specific location, the packing your plant can actually receive, and — on an import — whether an anti-dumping duty is in force against that origin on that date. Everything else is arithmetic on numbers you can check.