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India Union Budget 2025: Customs Amendments - A Detailed Analysis

The Indian Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced significant changes to customs duties, impacting various sectors and industries. This analysis provides a comprehensive overview of these changes, focusing on their potential effects on businesses and consumers.

Disclaimer: This blog post summarizes customs duty changes based on the provided text. It’s for informational purposes only and not professional advice. Consult official sources for definitive information.

Chapter 3: Fish and crustaceans, molluscs and other aquatic invertebrates

Change: BCD reduced on Frozen Fish Paste (Surimi) classified under tariff item 0304 99 00 for export-oriented surimi analogue product manufacturing.
Rate Change: 30% to 5%
Effective Date: Already in force (Notification No. 5/2025 Customs, dated 1st February 2025).

Chapter 10: Cereals

Change: Supplementary Note inserted for tariff items 1006 30 11 and 1006 30 91. Tariff items 1006 30 10 to 1006 30 90 and related entries are substituted.
Effective Date: 1st May 2025
Treatment Before Effective Date: Existing classification and rates apply.

Chapter 15: Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes

Change: Tariff rate reduced on glycerol (tariff item 1520 00 00).
Rate Change: 30% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: Existing rates under S. Nos 81 and 81A of Notification No. 50/2017-Customs continue.

Chapter 20: Preparations of vegetables, fruit, nuts or other parts of plants

Change: Tariff items 2008 19 20 to 2008 19 90 substituted. New tariff items 2008 19 21, 2008 19 22, and 2008 19 29 created for ‘Makhana’. Supplementary Note added for Makhana.
Effective Date: 1st May 2025
Treatment Before Effective Date: Existing classification and rates apply.

Chapter 23: Residues and waste from the food industries; prepared animal feed

Change: BCD reduced on Fish Hydrolysate (sub-heading 2301 20) for aquatic feed manufacturing.
Rate Change: 15% to 5%
Effective Date: Already in force (Notification No. 5/2025 Customs, dated 1st February 2025).

Chapter 25: Salt; sulphur; earths and stone; plastering materials, lime and cement

Change: Tariff rate reduced on marble and travertine (2515 11 00, 2515 12 10, 2515 12 20, 2515 12 90) and granite (2516 11 00 and 2516 12 00).
Rate Change: 40% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD and 20% AIDC apply from 2nd February 2025 (Notification No. 4/2025 and Notification No. 6/2025).

Chapter 26: Ores, slag and ash

Change: Effective BCD rates on certain items (not specified) incorporated into the First Schedule.
Effective Date: 1st May 2025

Chapter 27: Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

Change: Tariff item 2710 91 00 substituted. Rate reduced on Liquefied Propane (2711 12 00) and Butane (2711 13 00), and on LPG (2711 19 10, 2711 19 20, and 2711 19 90).
Rate Change: 15% to 2.5% (Propane/Butane), 15% to 5% (LPG)
Effective Date: 1st May 2025 (LPG rate change and new tariff items)
Treatment Before Effective Date: Existing rates apply.

Chapter 28: Inorganic chemicals; organic or inorganic compounds of precious metals; of rare-earth metals, of radioactive elements or of isotopes

Change: Rate reduced on Phosphoric Acid (2809 20 10) and Boric acid (2810 00 20). 2812 19 30 substituted. New tariff items 2813 90 30 and 2853 90 50 created.
Rate Change: 20% to 7.5% (Phosphoric Acid), 27.5% to 7.5% (Boric acid)
Effective Date: 1st May 2025
Treatment Before Effective Date: Existing rates apply.

Chapter 29: Organic chemicals

Change: Rate reduced on items under 2933 59. 18 new supplementary notes and tariff items created/substituted/modified.
Rate Change: 10% to 7.5%
Effective Date: 1st May 2025
Treatment Before Effective Date: 7.5% BCD applies from 2nd February 2025 (Notification No. 4/2025).

Chapter 33: Essential oils and resinoids; perfumery, cosmetic or toilet preparations

Change: Rate reduced on synthetic flavoring essences (3302 10).
Rate Change: 100% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD + 10% SWS from 2nd February 2025 (Notification No. 4/2025 and No. 7/2025). Existing concessional rate continues.

Chapter 34: Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, “dental waxes” and dental preparations with a basis of plaster

Change: Rate reduced on candles (3406).
Rate Change: 25% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD and 7.5 % AIDC + Nil SWS from 2nd February 2025 (Notification No. 4/2025, No. 6/2025 and No. 7/2025).

Chapter 38: Miscellaneous chemical products

Change: Rate reduced on Pharmaceutical Reference Standards (3822 90), Sorbitol (3824 60), and Prepared Binders (3824 99 00). Supplementary notes amended, new notes/items inserted/substituted in 3808, 3813, 3814.
Rate Change: 30% to 10% (Reference Standards), 30% to 20% (Sorbitol), 17.5% to 7.5% (Prepared Binders)
Effective Date: 1st May 2025
Treatment Before Effective Date: Existing rates apply (Reference Standards). 20% BCD + 10% SWS to Sorbitol, 7.5% BCD to Prepared Binders from 2nd February 2025.

Chapter 39: Plastics and articles thereof

Change: Rate reduced on plastics plates, sheets, films, foil, and strip (3920 and 3921).
Rate Change: 25% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD + 7.5 % AIDC + Nil SWS to specific PVC from 2nd February 2025 (Notification No. 4/2025, No. 6/2025 and No. 7/2025). Effective rates continue for others.

Chapter 41: Raw hides and skins (other than furskins) and leather

Change: BCD reduced on Wet Blue leather (4104, 4105, 4106). Export duty reduced on crust leather (4104, 4105, 4106).
Rate Change: 10% to Nil (BCD), 20% to Nil (Export Duty)
Effective Date: Already in force (Notification No. 5/2025 and No. 3/2025).

Chapter 60: Knitted or crocheted fabrics

Change: Rate revised on knitted fabrics (6004 10 00, 6004 90 00, 6006 22 00, 6006 31 00, 6006 32 00, 6006 33 00, 6006 34 00, 6006 42 00, 6006 90 00).
Rate Change: 10%/20% to “20% or Rs. 115 per kg, whichever is higher”
Effective Date: Already in force from the midnight of 1st/2nd February 2025.

Chapter 64: Footwear, gaiters and the like; parts of such articles

Change: Rate reduced on footwear (6401, 6402, 6403, 6404, 6405).
Rate Change: 35% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD and 18.5% AIDC + Nil SWS from 2nd February 2025 (Notification No. 4/2025, No. 6/2025 and No. 7/2025).

Chapter 68: Articles of stone, plaster, cement, asbestos, mica or similar materials

Change: Rate reduced on worked monumental or building stone (6802 except 6802 99 00).
Rate Change: 40% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD + 20% AIDC to marble slabs (6802 10 00, 6802 21 10, 6802 21 20, 6802 21 90, 6802 91 00, 6802 92 00) from 2nd February 2025 (Notification No. 4/2025 and No. 6/2025). Existing rates continue for others.

Chapter 71: Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof; imitation jewellery; coin

Change: Rate reduced on jewelry and parts (7113) and goldsmiths’/silversmiths’ wares and parts (7114). BCD reduced on platinum findings (7113). New tariff items created/substituted in 7106, 7108, 7110.
Rate Change: 25% to 20% (Jewelry/Wares), 25% to 5% (Platinum Findings BCD)
Effective Date: 1st May 2025 (Jewelry/Wares and new tariff items)
Treatment Before Effective Date: 20% BCD to Jewelry/Wares from 2nd February 2025 (Notification No. 4/2025). Platinum Findings BCD already in force.

Chapter 72: Iron and steel

Change: Rate reduced on specified steel products (7210 12 10, 7210 12 90, 7219 12 00, 7219 13 00, 7219 21 90, 7219 90 90, 7225 11 00).
Rate Change: 27.5%/22.5%/20% to 15%
Effective Date: 1st May 2025
Treatment Before Effective Date: Existing effective rates apply.

Chapter 73: Articles of iron or steel

Change: Rate reduced on specified iron/steel articles (7307 29 00, 7307 99 90, 7308 90 90, 7310 29 90, 7318 15 00, 7318 16 00, 7318 29 90, 7320 90 90, 7325 99 99, 7326 19 90, 7326 90 99).
Rate Change: 25% to 15%
Effective Date: 1st May 2025
Treatment Before Effective Date: Existing effective rates apply.

Chapter 74: Copper and articles thereof

Change: Rate reduced to Nil on Copper waste & scrap (7404 00 12, 7404 00 19, 7404 00 22).
Effective Date: 1st May 2025
Treatment Before Effective Date: Nil BCD from 2nd February 2025 (Notification No. 4/2025).

Chapter 78: Lead and articles thereof

Change: Rate reduced to Nil on Lead waste and scrap (7802).
Rate Change: 5% to Nil
Effective Date: Already in force (Notification No. 5/2025).

Chapter 79: Zinc and articles thereof

Change: Rate reduced to Nil on Zinc waste and scrap (7902).
Rate Change: 5% to Nil
Effective Date: Already in force (Notification No. 5/2025).

Chapter 80: Tin and articles thereof

Change: Rate reduced to Nil on unwrought Tin (8001) and Tin waste and scrap (8002).
Rate Change: 5% to Nil
Effective Date: 1st May 2025 (Unwrought Tin), Already in force (Tin waste and scrap)
Treatment Before Effective Date: Nil BCD to Tin waste and scrap from 2nd February 2025 (Notification No. 4/2025).

Chapter 81: Other base metals; cermets; articles thereof

Change: Rate reduced to Nil on various unwrought metals: Tungsten (8101 94 00), Molybdenum (8102 94 00), Tantalum (8103 20), Cobalt (8105 20 20), Bismuth (8106 10 10), Zirconium (8109 21 00), Antimony (8110 10 00), Beryllium (8112 12 00), Hafnium (8112 31), Rhenium (8112 41 10), Cadmium (8112 69 10, 8112 69 20).
Rate reduced to Nil on various metal waste and scrap: Antimony (8110 20 00), Beryllium (8112 13 00), Bismuth (8106 90 10), Cadmium (8112 61 00), Cobalt (8105 30 00), Molybdenum (8102 97 00), Rhenium (8112 41 20), Tantalum (8103 30 00), Tungsten (8101 97 00),
Zirconium (8109 31 00, 8109 39 00). BCD reduced on Cobalt Powder (8105 20 30). Heading description amended in 8112.
- Rate Change: Various to Nil
- Effective Date: 1st May 2025 (Unwrought metals, waste & scrap, heading amendment)
- Treatment Before Effective Date: Nil BCD to various metal wastes and scraps from 2nd February 2025 (Notification No. 4/2025). Cobalt Powder reduction already in force.

Chapter 84: Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

Change: Capital goods added to the exemption list for Lithium Ion Battery manufacturing for mobile phones (Table A) and EVs (Table B). These are additions to existing notifications, not rate changes. Therefore, the existing BCD exemption continues to apply.
- Table A (Mobile Phones): Various capital goods (Auto-taping machine, Auto-packing machine, etc.) under HSN 8465, 8422, 8479, 8428, 8462, 8464, 8421, 8515. Specific tariff items within these HSNs are listed in the original document.
- Table B (EVs): Various capital goods (Solvent Recovery System, Heat Recovery System, etc.) under HSN 8479, 8414, 8421, 9031, 8515, 8428, 8543, 9030, 3923, 7616, 7304, 7326, 9022, 8468, 7308, 8424. Specific tariff items within these HSNs are listed in the original document.
Effective Date: Already in force (Notification No. 11/2025-Customs, dated 1st February 2025).

Chapter 85: Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

Change: BCD increased on Interactive Flat Panel Displays (CBU) (8528 59 00). BCD reduced on Open Cell (8524), Touch glass sheet and Touch sensor PCB (8529) for IFPD module manufacturing. BCD reduced on inputs/parts for LCD/LED TV open cell manufacturing. BCD reduced on Ethernet Switches (8517 62 90, 8517 69 90). Tariff rate reduced on solar module, semiconductor devices, and photovoltaic cells (8541 43 00, 8541 49 00). Tariff rate reduced on Solar cells (8541 42 00). BCD reduced on Lithium-Ion Battery waste and scrap (8549 13 00, 8549 14 00, 8549 19 00). Notification amended regarding inputs/parts for mobile phone component manufacturing. Notification omitted. Sub-heading note amended.
Rate Change: 10% to 20% (IFPD CBU), various to 5% (Open Cell, Touch glass sheet, Touch sensor PCB), 2.5% to Nil (TV open cell inputs/parts), 20% to 10% (Ethernet Switches), 40% to 20% (Solar module etc.), 25% to 20% (Solar cells), 5% to Nil (Li-Ion Battery waste).
Effective Date: Already in force (various notifications dated 1st February 2025 for reductions). 1st May 2025 for some rate changes (Solar module, Solar cells).
Treatment Before Effective Date: 20% BCD and 20% AIDC + Nil SWS apply to Solar module/devices/cells from 2nd February 2025 (Notification No. 4/2025 and No. 6/2025 and No. 7/2025).

Chapter 87: Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof

Change: Rate reduced on passenger vehicles (8702) and goods vehicles (8704). Rate reduced on motor vehicles (8703). Rate reduced on motorcycles (8711). Rate reduced on bicycles (8712 00 10). Effective rates restructured and reduced for motorcycles.
Rate Change: 40% to 20% (8702, 8704), 125% to 70% (8703), 100% to 70% (8711), 35% to 20% (8712 00 10), various for motorcycles.
Effective Date: 1st May 2025
Treatment Before Effective Date: Various rates and conditions apply from 2nd February 2025 (Notification No. 4/2025, No. 6/2025, and No. 7/2025).

Chapter 89: Ships, boats and floating structures

Change: Rate reduced on yachts and other pleasure/sports vessels (8903).
Rate Change: 25% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD + 7.5% AIDC + Nil SWS from 2nd February 2025 (Notification No. 4/2025, No. 6/2025 and No. 7/2025).

Chapter 90: Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof

Change: Rate reduced on electricity meters (smart meters) (9028 30 10).
Rate Change: 25% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD + 7.5% AIDC + Nil SWS from 2nd February 2025 (Notification No. 4/2025, No. 6/2025 and No. 7/2025).

Chapter 94: Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings

Change: Rate reduced on seats (9401), other furniture (9403), mattress supports etc. (9404), and luminaries etc. (9405).
Rate Change: 25% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD + 5% AIDC + Nil SWS from 2nd February 2025 (Notification No. 4/2025, No. 6/2025 and No. 7/2025).

Chapter 95: Toys, games and sports requisites; parts and accessories thereof

Change: Rate reduced on parts of electronic toys (9503 00 91).
Rate Change: 70% to 20%
Effective Date: 1st May 2025
Treatment Before Effective Date: 20% BCD + 7.5% AIDC + Nil SWS (for electronic toy manufacturing) or 20% BCD + 20% AIDC + Nil SWS (otherwise) from 2nd February 2025 (Notification No. 4/2025, No. 6/2025 and No. 7/2025).

Chapter 98: Miscellaneous manufactured articles

Change: Rate reduced on Laboratory Chemicals. Rate reduced on baggage (9803 00 00). Rate reduced on goods for personal use (9804).
Rate Change: 150% to 70% (Lab Chemicals), 100% to 70% (Baggage), 35% to 20% (Personal Use)
Effective Date: 1st May 2025
Treatment Before Effective Date: Various rates apply from 2nd February 2025. 70% BCD + 70% AIDC + Nil SWS for Lab Chemicals, 35% BCD + Nil SWS for baggage, 20% BCD + Nil SWS for personal use (with some exceptions) (Notification No. 4/2025, No. 6/2025 and No. 7/2025).

Legislative Changes (Customs, Central Excise):

Customs Act, 1962: Several amendments are made, including:
- A two-year time limit (extendable by one year) for finalizing provisional assessments (Section 18).
- Introduction of a new Section 18A for voluntary revision of entry post clearance.
- Amendments to Sections 27, 28, 127A, 127B, 127C, 127D, 127F, 127G, and 127H related to the Settlement Commission and Interim Board.
Customs Tariff Act, 1975: Amendments are made to the First Schedule, primarily to create new tariff items and supplementary notes for better classification of goods.
Customs (Import of Goods at Concessional Rates or For Specified End Use) Rules, 2022: Rules 6 and 7 are amended to increase the time limit for fulfilling end-use and to allow quarterly statements instead of monthly ones.
Central Excise Act, 1944:
- The additional excise duty on unblended diesel is deferred until March 31, 2026.
- The Customs, Central Excise and Service Tax Settlement Commission (CCESC) is abolished effective April 1, 2025. Pending applications will be handled by Interim Boards. Consequential amendments are made to relevant sections.
Service Tax Exemption: Reinsurance services under the Weather Based Crop Insurance Scheme (WBCIS) and the Modified National Agricultural Insurance Scheme (MNAIS) are retrospectively exempted from service tax.

CGST Act, 2017 Amendments:

Several amendments are proposed to the CGST Act, 2017, including:

Section 2: Amendments to definitions.
Sections 12 & 13: Omission of provisions related to the time of supply for vouchers.
Section 17: Amendment related to input tax credit on plant and machinery.
Section 20: Amendments related to input tax credit distribution.
Section 34: Amendment related to input tax credit reversal for credit notes.
Section 38: Amendments related to the statement of input tax credit.
Section 39: Amendment for prescribing conditions and restrictions for filing returns.
Sections 107 & 112: Amendments related to pre-deposit of penalty for appeals.
Section 122B: Insertion of a new section for penalties related to the Track and Trace Mechanism.
Section 148A: Insertion of a new section for enabling a Track and Trace Mechanism.
Schedule III: Amendments related to supplies of goods from SEZs/FTWZs and definitions of SEZ, FTWZ, and DTA.

Boosting Domestic Manufacturing and Competitiveness:

A core theme of the Budget 2025 customs duty revisions is the promotion of domestic manufacturing. Several key measures aim to reduce input costs for Indian industries, making them more competitive globally.

Critical Minerals Get a Boost: Recognizing the importance of critical minerals for various sectors, the government fully exempted 14 critical minerals, including cobalt products, LEDs, zinc, and lithium-ion battery scrap, from Basic Customs Duty (BCD). This move is expected to significantly reduce input costs for industries reliant on these minerals, fostering growth and innovation. This supports the burgeoning electric vehicle (EV) and electronics manufacturing sectors in India.
EV and Mobile Battery Manufacturing Incentivized: Continuing its push for sustainable transportation and electronics manufacturing, the government extended exemptions on capital goods required for EV battery manufacturing and mobile phone battery production. This reinforces India’s commitment to becoming a global hub for these industries.
Leather Industry Supported: The leather industry received a boost with the full exemption of wet blue leather from BCD. This reduction in input costs will enhance the competitiveness of Indian leather manufacturers.

Supporting Key Sectors and Affordability:

The budget also addressed specific sectors and aimed to make certain goods more affordable for consumers.

Life-Saving Drugs Made More Accessible: In a significant move, 36 life-saving drugs, primarily for cancer and rare diseases, were fully exempted from BCD. This will drastically reduce the cost of these critical medications, making them more accessible to patients and their families.
Aquaculture Sector Gets a Lift: The customs duty on frozen fish paste (Surimi), a crucial ingredient in shrimp feed, was substantially reduced from 30% to 5%. This measure is expected to boost the aquaculture sector, making shrimp farming more cost-effective and competitive.
Jewelry Becomes More Affordable: Consumers can expect slightly lower prices on jewelry as the customs duty on jewelry and its parts was reduced from 25% to 20%. This change aims to stimulate the gems and jewelry industry.
Platinum Findings Duty Slashed: The customs duty on platinum findings, used in jewelry making, was also reduced significantly from 25% to 5%, further benefiting the gems and jewelry sector.

Addressing Inverted Duty Structure and Promoting Domestic Production:

The budget also addressed the issue of inverted duty structure in certain sectors.

Interactive Flat-Panel Displays Duty Increased: To encourage domestic manufacturing and rectify the inverted duty structure, the basic customs duty on interactive flat-panel displays was increased from 10% to 20%. This could lead to a slight increase in the price of these displays but is intended to incentivize local production.

Streamlining Customs Procedures and Simplifying Taxation:

The government continued its efforts to simplify the customs regime and make it more efficient.

Rationalization of Tariff Rates Continues: Seven more tariff rates were eliminated, building on the rationalization efforts from the previous budget. This simplifies the customs tariff structure, making it easier for businesses to navigate.
Provisional Assessment Time Limit Introduced: A new two-year time limit for provisional assessments in customs clearance was established, promoting efficiency and transparency in customs procedures.
Focus on Handicraft Exports: While specific details are awaited, the budget mentioned measures to promote handicraft exports, signaling the government’s commitment to supporting this important sector.

CGST Act Amendments:

(Details to Follow): The Budget speech typically outlines proposed changes to the GST regime. Detailed amendments to the Central Goods and Services Tax (CGST) Act, 2017, are expected to be released after the budget. These could include changes related to rates, exemptions, input tax credit rules, compliance requirements, and other important aspects of GST. Businesses should stay informed about these changes as they can have a substantial impact on their operations.

Other Key Changes:

Rationalization of Tariff Rates: Seven more tariff rates were eliminated, continuing the government’s efforts to simplify the customs tariff structure.
Focus on Handicraft Exports: The budget mentioned measures to promote handicraft exports, although specific details are awaited.
MSME Support: The budget included measures to enhance support for Micro, Small, and Medium Enterprises (MSMEs), including an increase in the MSME cover. While not directly related to customs or GST, these measures can have a significant impact on businesses engaged in international trade.

Impact and Outlook:

The customs duty changes announced in the Budget 2025 are expected to have a wide-ranging impact on various sectors. The focus on boosting domestic manufacturing, supporting key industries, and simplifying the customs regime is likely to have positive effects on the Indian economy. Businesses should carefully analyze these changes to understand their implications and adapt their strategies accordingly. This budget reinforces the government’s commitment to “Make in India” and aims to enhance India’s position in the global economy.

Disclaimer:

This summary of customs duty changes is based solely on the text provided. While every effort has been made to ensure accuracy, this summary is for informational purposes only and should not be considered legal or financial advice. It is essential to consult the official notifications, the Finance Bill, and other relevant government publications for the most up-to-date and accurate information. The interpretation and application of customs regulations can be complex and may vary depending on specific circumstances. Therefore, it is strongly recommended to seek professional advice regarding any specific import or export activities. No liability is accepted for any errors or omissions in this summary, or for any actions taken in reliance thereon.