What is Social Welfare Surcharge?

What it is

The Social Welfare Surcharge is a duty of customs on imported goods, levied under section 110 of the Finance Act, 2018. It came in on 2 February 2018 and replaced the education cesses that used to be charged on imports. The money is meant for government spending on health, education and social security.

What it is charged on

It is not charged on the value of the goods. It is charged on the total of the customs duties levied on the import, mainly basic customs duty. The Act leaves out:

• safeguard duty
• countervailing duty
• anti-dumping duty
• the surcharge itself.

Import IGST and GST compensation cess are kept out of the base by notification.

Goods that are exempt

The government exempts many goods from the surcharge by notification, and changes the list from time to time, usually in the Union Budget. Some goods that carry the Agriculture Infrastructure and Development Cess are exempt, and gold and silver were exempted in May 2026. Whether an import attracts the surcharge depends on its tariff heading and the exemptions in force on the bill of entry date. Your customs broker, or the duty calculator on the ICEGATE portal, shows the current position for each heading.

Why it matters to an importer

• It raises the IGST base. Import IGST is charged on the assessable value plus basic customs duty plus the surcharge, so the surcharge slightly increases the IGST paid at clearance.
• It is a cost, not a credit. Unlike import IGST, it cannot be claimed as input tax credit or set off against GST on sales.
• It belongs in landed cost. Add it, with basic customs duty, to the purchase cost of the stock. Leaving it out understates landed cost and overstates the margin on every unit sold.

In the books

Customs duties that cannot be recovered are part of the cost of purchase of inventory. Record the surcharge with basic customs duty in the stock's cost, not as a separate expense, so it is charged to the profit and loss account as the stock is sold.