New Delhi: The Union Budget 2026-27 has proposed a sweeping set of customs and excise reforms aimed at simplifying the tariff structure, improving “ease of living” and boosting trade facilitation, including a sharp cut in the tariff rate on all dutiable goods imported for personal use to 10% from 20%.
Presenting the Budget in Parliament, Finance Minister Nirmala Sitharaman said the measures are designed to support domestic manufacturing, promote export competitiveness and correct duty inversions while reducing compliance frictions.
To provide relief to patients—particularly those undergoing cancer treatment—the Budget proposes to exempt basic customs duty on 17 drugs or medicines and to add seven more rare diseases to the list eligible for duty-free personal imports of drugs, medicines and Food for Special Medical Purposes (FSMP).
The government will also revise baggage rules for international travellers to enhance duty-free allowances, clarify temporary carriage of goods and allow honest taxpayers to close disputes by paying an additional amount in lieu of penalty.
On the process side, the Budget deepens the shift to trust-based customs systems. The duty deferral period for Tier-2 and Tier-3 Authorised Economic Operators (AEOs) will be extended to 30 days from 15 days, with eligible manufacturer-importers also getting access to the facility.
The validity of advance rulings binding on Customs will be extended to five years from three, and regular importers with trusted supply chains will be recognised in the risk system to minimise repetitive checks.
The reforms also seek to speed up logistics. Export cargo using electronic sealing will be allowed factory-to-ship clearance, and for compliant imports, filing of a bill of entry by a trusted importer will trigger automated clearance processes.
In a further overhaul, the customs warehousing framework will shift to a warehouse operator-centric system with self-declarations, electronic tracking and risk-based audits, moving away from officer-dependent approvals to cut delays and compliance costs.