Budget 2026-27 revamps customs, reduces import duties

The Union Budget 2026-27 has simplified customs procedures by rationalising exemptions, waiving duty on 17 cancer drugs, easing baggage rules, and cutting duty on personal imports to 10 per cent. It also introduced a trust-based system using AI and faster dispute settlement

New Delhi: The Budget 2026-27 has simplified the customs regime by rationalising exemptions, waiving customs duty on 17 cancer drugs, easing baggage rules, and reducing duty to 10 per cent on goods imported for personal use.

Finance Minister Nirmala Sitharaman on Sunday unveiled a “trust-based” customs regime, which will have a single-window system for cargo clearances, lesser verification for regular importers with trusted, longstanding supply chains, easier duty payment norms for Authorised Economic Operators (AEOs), and the use of AI in scanning at ports.

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Sitharaman also announced that honest taxpayers can settle customs disputes by paying an additional amount in lieu of penalty and promised to roll out a Customs Integrated System (CIS) within two years for all Customs processes.

She further announced that advance rulings will be binding on customs authorities for five years, up from three years currently.

She also said the Customs warehousing framework will be transformed into a warehouse operator-centric system with self-declarations, electronic tracking, and risk-based audits.

In her Budget speech, Sitharaman said that the Customs proposals “aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct duty inversion”.

“The reforms will move away from the current system of officer-dependent approvals and reduce transaction delays and compliance costs,” she said.

The Budget proposed revising provisions governing baggage clearance during international travel to address genuine concerns of passengers. The revised rules will enhance duty-free allowances in line with present-day travel realities and provide clarity on the temporary carriage of goods brought in or taken out.

Under the Baggage Rules, 2016, Indian residents and foreigners residing in India arriving from countries other than Nepal, Bhutan, or Myanmar can bring Rs 50,000 worth of duty-free goods.

With regard to the import of goods for personal use, the Budget proposes reducing the tariff rate on all such dutiable goods from 20 per cent to 10 per cent.

Personal-use goods will exclude motor vehicles, alcohol, and tobacco.