Export Duty in India: Calculation, Rates & How To Pay

What Is Export Duty?

Export duty is a tax imposed by a government on goods exported from India.

The government applies these taxes for two primary reasons: First, they function as a revenue source for the state treasury. Second, they regulate the export of specific raw materials so that the domestic supply and market prices remain stable for local factories and buyers.

Take iron ore, for example. The Indian government uses export duties as a price stabilization lever to keep enough material inside the country for local steel production. The government took a decision along these lines in August 2022 as it increased the export duty on iron ore to 50% to prioritize affordable housing projects, like Pradhan Mantri Awaz Yojana Urban (PMAY-U).

Export duty rates vary based on the type of goods being sent abroad. Many manufactured items receive a full exemption to stay competitive in global markets.

Under the customs framework, every product has a specific classification called the Harmonized System Nomenclature (HSN). This 8-digit international coding system groups items by their description and use, and the HSN code decides the exact tax rate applied at the port.

Who Pays Export Duty in India?

Any exporter, whether an Indian entity or an individual, must pay export duty in India. And they must complete the payment before customs clearance at the port.

However, there is a caveat. Only exporters of physical goods listed under the Second Schedule of the Customs Tariff Act, 1975, must pay export duty. Goods not in the Second Schedule are duty-free at the port of origin.

Service exporters do not pay export duty. This includes sectors like IT, consulting, design, and freelance work. Instead of duties, service exporters deal with zero-rated taxation rules under the IGST Act and RBI rules for inward remittances.

Table comparing goods and service exporters on key factors:

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What Are the Different Types of Export Duties in India?

There are three types of export duties in India: Ad valorem duty, specific duty, and compound duty.

Ad valorem duty is a flat percentage of the Free On Board (FOB) value of the exported goods. If the FOB value is ₹20,00,000 and the ad valorem rate is 10%, then the export duty is ₹2,00,000.

Specific duty relies on a fixed monetary amount charged per unit, like weight or volume, instead of the value. For example, the government might charge ₹1,000 per tonne of a specific material regardless of its value. By fixing a set tax amount per metric tonne, the government secures a predictable revenue stream and stops exporters from under-invoicing their shipments.

Compound duty is a mix of ad valorem and specific duty. An exporter might pay a 5% ad valorem rate plus a fixed ₹200 per kilogram on the same shipment.

The type of export duty applicable to a product depends on the HSN code. For example, for rough blocks of granites (HSN 2516), the ad valorem rate is 15%, while for processed granite (HSN 6802), like tiles, there is no export duty.

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Which Goods Attract Export Duty in India?

Export duty applies only to items listed in the Second Schedule; all other goods are exported duty-free. The government chooses specific goods to protect domestic supply chains and discourage bulk extraction.

Example of goods where export duty applies:

Iron ore lumps and fines with an iron content of 58% and above face a 30% ad valorem tax. If the iron content is below 58%, the rate is 0%. Chrome ore and concentrates also face a 30% tax rate.

On May 1, 2025, the government of India imposed a uniform 20% export duty on various parboiled and GI-recognized rice varieties. The goal was to stabilize domestic availability. Similarly, to address the West Asia crisis, the government introduced export levies on petroleum products effective ‌March 27, 2026. For the fortnight starting ‌June 1, 2026, rates are set at ₹1.5 per litre for petrol, ₹13.5 per litre for diesel, and ₹9.5 per litre for aviation turbine fuel (ATF). The rates are revised every fortnight.

Standard manufactured items like cars, textiles, and processed foods are not in the Second Schedule. Software and digital services also carry a 0% rate. These items pass through customs with a zero tax rate.

You can find the exact export duty rate by checking your product HSN code in the Second Schedule.

How Is Export Duty Calculated?

Export duty is calculated by applying the rate listed in the Second Schedule of the Customs Tariff Act to your product's FOB (Free on Board) value. For an ad valorem rate, you multiply the FOB value by the duty percentage; for a specific rate, you multiply the quantity or weight by the fixed amount per unit. The FOB value is the basis, not the CIF value, so overseas freight and insurance are excluded. Follow these steps to calculate the export duty on your products:

Worked example (ad valorem):

Commodity: Iron ore (Fe content 60%) , Duty rate: 30%  ad valorem , FOB amount: ₹15,00,000 , Duty payable: ₹15,00,000 x 30% = ₹4,50,000

Worked example (Nil rate)

Commodity: Readymade garments , Duty rate: Nil , FOB amount: ₹ 10,00,000 , Duty payable: 0

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How To Pay Export Duty on ICEGATE?

You must pay export duty online through the ICEGATE portal. The e-payment gateway allows exporters to settle their dues 24/7 using authorized bank accounts.

Remember: Only after the tax is fully paid will the customs officer grant the Let Export Order (LEO) under Section 51. Without the LEO, the cargo cannot be loaded onto the outgoing vessel.

You can also use the E-Cash Ledger to create a virtual account on the ICEGATE website. This account allows exporters to deposit advance funds and instructs the customs system to deduct the exact duty amount upon shipping bill assessment.

Here are the steps to pay export duty on ICEGATE:

Visit icegate.gov.in

ICEGATE Home Page

Click on Services, and then E-Payment from the drop-down list

ICEGATE e-payment

Log in to your ICEGATE account using ICEGATE ID and password\

ICEGATE Login

You will see the following screen, asking for four additional details before proceeding forward. Choose the document type as Central Excise/Service Tax, Document type as CE (Central Excise), your port location, and then your Identification number (IEC code)

ICEGATE Login additional details

After you click Submit, you will see a list of unpaid challans

ICEGATE unpaid challans

Click on the checkbox/checkboxes to make payment for a challan(s). You can select a maximum of 10 challans at a time. After you have chosen the challan(s), click on the Confirm Challan button

ICEGATE Confirm Challans

On the next screen, you will see the selected challan (s) and a Pay Now button; click on it to generate the mandate form

ICEGATE Pay Now

You will see the total duty amount at the top. Click on your preferred mode of payment on the left side, then click the Generate Mandate Form button

ICEGATE Mode of Payment

You will see the mandate form details on your screen. It will include the account number, account name, and IFSC code. 

ICEGATE Mandate Form

Click on the Print/Save button. Based on the mandate details, you can pay export duty online or visit your nearest bank branch, and pay it offline

Are There Exemptions or Refunds on Export Duty?

Some goods qualify for lower tax rates or full waivers under specific government notifications. These waivers are for specific industries that need to compete in difficult global markets.

Trade agreements between India and other countries can also reduce the tax on products. For example, in the India-UK Comprehensive Economic and Trade Agreement (CETA), 2025, the Indian government waived ‌the 18% export duty on Indian Original Equipment Manufacturers (OEMs) to improve the price competitiveness of Indian vehicles in the UK market. Always check the latest CBIC circulars to see if your cargo qualifies for these benefits.

Export duty is not refundable after the goods leave India. The government does not have a standard drawback system for outbound taxes like it does for imports.

Refunds apply if the goods are returned to India within one year of being sent. They also apply if the goods never left the port despite the tax having been paid. Exporters must file a refund application on the ICEGATE portal with proof of the return or short-shipment.

Exemptions overview

What Are the Latest Export Duty Amendments in Budget 2026?

Budget 2026 did not add additional export duties to the Second Schedule. Instead, it focused on making operations easier and lowering costs for manufacturers.

Here are the latest export duty changes in Budget 2026:

How Does Skydo Assist Indian Exporters With Cross-Border Payments?

After paying export duty, goods exporters lose money on hidden charges for receiving international payments. Service exporters do not pay export duty but risk losing as much as 5% to banks or payment platforms like PayPal.

Skydo removes hidden fees entirely. There is a flat fee system: $19 for payments under $2,000, $29 for payments between $2,000 and $10,000, and 0.3% for $10,000+.

Traditional banks do not always issue RBI-mandated compliance documents. Skydo issues an FIRC automatically for every transaction, so keeping an audit trail of your export proceeds gets a lot easier.

You get real-time visibility of your payments as they’re settled into your bank account within 24 hours. You don’t have to call your client or bank relationship manager to get an update on the payment status.

It only takes 15-minutes to create a virtual account in USD, SGP, AUD, GBP, or EUR. If you’re an exporter, freelancer, or an Amazon global seller, Skydo is a perfect payment platform to grow your business.