Budget 2026: How India plans to simplify customs duty structure
What's the story
The Indian government is mulling over a major overhaul of its customs duty structure in the upcoming 2026 Union Budget. The plan involves reducing the number of customs duty slabs from eight to five or six. The move is aimed at simplifying the tariff structure, reducing litigation, and better aligning import duties with India's industrial and trade priorities.
Dispute resolution
Focus on resolving customs classification disputes
The proposed changes also focus on resolving disputes over customs classifications, correcting inverted duty structures, and scaling back discretionary exemptions. This comes in light of recently concluded trade pacts and ongoing negotiations. The government is also pushing for a paperless, seamless customs system as part of these reforms.
GST alignment
Synchronization with revamped GST
The Central Board of Indirect Taxes and Customs is working toward synchronizing customs duties with the revamped Goods and Services Tax (GST). This is part of a broader effort to create a seamless and coherent system. The department is actively addressing all pain points flagged by businesses in this regard. The government is also looking to redefine the duty structure between Special Economic Zones and domestic tariff areas to reducing classification disputes, a major cause of litigation in customs cases.
Litigation statistics
Pending customs cases and recoverable arrears
According to a report by the Parliamentary Standing Committee on Finance, there were 75,592 pending customs cases in December 2024. The recoverable arrears from these cases stood at ₹24,016.20 crore. The industry has proposed an amnesty scheme for cases where disputes don't stem from willful evasion as a way to reduce litigation.