The Union Budget 2026-27 has proposed sweeping reforms in customs and central excise aimed at simplifying the tariff structure, easing compliance, improving trade facilitation, and providing relief to passengers and patients, Union Finance Minister Nirmala Sitharaman said in Parliament on Sunday.
Presenting the Budget, the Finance Minister said the measures are designed to support domestic manufacturing, enhance export competitiveness and correct duty inversion, while strengthening trust-based systems in customs administration.
Import Duty on Personal Goods Halved
To improve ease of living, the Budget proposes to reduce the tariff rate on all dutiable goods imported for personal use from 20 per cent to 10 per cent. The move is expected to rationalise the customs duty structure and lower costs for individual importers.
In addition, the government has proposed revising baggage clearance rules for international travellers. The changes aim to enhance duty-free allowances, provide clarity on temporary carriage of goods, and address long-standing concerns of passengers.
Relief for Patients and Rare Diseases
Providing significant relief to patients, particularly those undergoing cancer treatment, the Budget proposes to exempt basic customs duty on 17 drugs and medicines. Further, seven more rare diseases will be added to the list of conditions eligible for exemption from import duties on personal imports of drugs, medicines and Food for Special Medical Purposes (FSMP) used for their treatment.
The Finance Minister also announced a provision allowing honest taxpayers to settle pending customs dues by paying an additional amount in lieu of penalties, enabling closure of long-pending cases.
Trust-Based Customs and Trade Facilitation
The Budget places strong emphasis on trust-based systems to ensure faster and smoother movement of goods. The duty deferral period for Tier 2 and Tier 3 Authorised Economic Operators (AEOs) will be enhanced from 15 days to 30 days. Eligible manufacturer-importers will also be extended the same facility, encouraging them to obtain Tier 3 AEO accreditation.
The validity of advance rulings, which are binding on Customs, will be extended from the current three years to five years. Government agencies will be encouraged to leverage AEO accreditation for preferential treatment in cargo clearance.
Faster Clearance and Digital Processes
As part of efforts to minimise intervention and improve certainty for trade, regular importers with trusted and long-standing supply chains will be recognised in the risk management system, reducing repeated cargo verification. Export cargo using electronic sealing will be allowed clearance directly from factory premises to the ship.
For imports not requiring compliance checks, filing of a bill of entry by a trusted importer and the arrival of goods will automatically trigger customs clearance procedures.
Overhaul of Warehousing Framework
The Finance Minister also announced a major transformation of the customs warehousing framework into a warehouse operator-centric system. The new approach will rely on self-declarations, electronic tracking and risk-based audits, moving away from officer-dependent approvals. These reforms are expected to reduce transaction delays, lower compliance costs and improve overall efficiency in customs operations.
