Union Budget 2026 – Changes in Customs law and duty rates

The Union Budget was presented in the Lower House (Lok Sabha) of the Indian Parliament today, i.e., 1 February 2026. Some of the major changes in the Customs law, including the changes in the rate of customs duties for certain specified goods, as per the Finance Bill, 2026 and the Customs notifications issued today, are highlighted below. 
 

Changes in Customs law and procedures:
 

• Advance Rulings will be valid for 5 years instead of 3 years. Validity of Rulings in force at present can be extended upon request by applicant. Changes proposed in Section 28J of the Customs Act, 1962.
   
• Penalty paid under Section 28(5) [voluntary compliance], on determination under Section 28(6), shall be deemed to be a charge for non-payment of duty. Changes proposed in Section 28.
   
• No prior permission required for removal of warehoused goods from one customs-bonded warehouse to another. Section 67 proposed to be substituted. 
   
• Fishing by Indian-flagged vessels beyond territorial waters of India – Fish to be brought into India duty-free; to be considered as exports, if landed on foreign port. Changes proposed in Sections 1 and 2. New Section 56A to be introduced.
   
• Baggage Rules, 2026 notified in supersession to Baggage Rules, 2016. Duty-free allowance revised while provisions updated and modernised.
   
• Customs Baggage (Declaration and Processing) Regulations, 2026 notified in supersession to Passenger’s Baggage (Levy of Fees) Regulations, 1966, the Baggage (Transit to Customs Stations) Regulations, 1967 and the Customs Baggage Declaration Regulations, 2013.
   
• Eligible Manufacturer Importer shall be permitted to make deferred payment of import duty up to the 31 March 2028. 135/2016-Customs (N.T.) amended.
   
• Deferred payment facility to allow payment by 1st day of next month, except for month of March. Deferred Payment of Import Duty Rules, 2016 to be amended w.e.f. 1 March 2026.
   

Changes in Customs duty rates:
 

• Personal use goods (other than specified) – Basic Customs duty (BCD) to be reduced to 10% w.e.f. 1 April 2026. Changes proposed in Heading 9804 of the Customs Tariff Act, 1975.
   
• Umbrellas and parts – Specific duty component introduced w.e.f. 2 February 2026.
   
• Tarrifisation – Customs Tariff will be further simplified and BCD on certain goods falling in some 54 Headings/Tariff Items will be as per Schedule-I to the Customs Tariff. This change will come into effect from 1 May 2026. Refer Clause 136 read with Schedule V of the Finance Bill 2026. 
   
• New Tariff lines will be created for various goods w.e.f. 1 May 2026. Refer Clause 136 read with Schedule IV of the Finance Bill 2026.
   
• 102 exemptions/concessional rates are being extended up to 31 March 2028. Refer Notification 2/2026-Cus.
   
• 22 exemptions/concessional rates are being lapsed on their end dates of 31 March 2026. Refer Notification 2/2026-Cus.
   
• 14 unconditional exemptions (including 5 redundant exemption entries) are being lapsed vide omitting the entries w.e.f. 2 February 2026. Refer Notification 2/2026-Cus.
   
• Sunset clause is being removed from 3 unconditional exemption entries while is being prescribed for 4 conditional exemption entries. Refer Notification 2/2026-Cus.
   
• Precious stones imported by post on approval or return basis – Exemption extended till 31 March 2028.
   
• Imports for execution of export order or jobbing – Exemption extended till 31 March 2028.
   
• Certain minerals, chemicals and base metals – BCD and SWS exemption limited to 30 April 2026.