Disclaimer:
This article is based on Customs notifications issued by the DO Joint Secretary and other official information available as of February 01, 2026. It is intended for informational purposes only and does not constitute financial, legal, or professional advice.
This content has been generated using AI and may contain inaccuracies or omissions. Readers are advised to refer to the relevant and latest Customs notifications and official sources for complete and accurate data before taking any action or implementing the information provided herein.
Sunshine Cargo Services Pvt. Ltd. shall not be responsible or liable for any errors, inaccuracies, or losses arising from the use of this information.
Published by: Sunshine Cargo Services Pvt. Ltd.
Licensed Customs House Agent | Kolkata, India
Date: February 2, 2026
What Changed in the Union Budget 2026 for Customs and Import-Export?
The Union Budget 2026–27 brings sweeping changes to India’s customs and trade framework. For customs clearing agents, importers, and exporters, this budget introduces critical duty rate changes, exemption reviews, structural reforms like tariffisation, and modernization of the Baggage Rules.
Understanding these changes is essential for compliance, cost optimization, and strategic planning.
This comprehensive guide breaks down every customs duty change, notification update, and procedural reform announced in Budget 2026, with special focus on what CHAs and importers need to know right now.
Table of Contents
Budget 2026 Customs Duty Changes — What Are the Three Effective Dates?
Which Items Saw Customs Duty Increases in Budget 2026?
What Are the Customs Duty Cuts in Budget 2026?
Which Pharma and Healthcare Imports Got Duty Exemptions in Budget 2026?
How Does Budget 2026 Impact Solar, EV and Green Energy Imports?
What Changed for Critical Minerals Imports in Budget 2026?
What Is Tariffisation and How Does It Affect Customs Clearance?
Which Customs Duty Exemptions Were Extended, Lapsed or Removed in Budget 2026?
What Export Benefits Were Announced in Union Budget 2026?
What Changed for Aviation, Defence and Nuclear Imports in Budget 2026?
What Are the Key Customs Act Amendments in Budget 2026?
What GST Changes Affect Import-Export in Budget 2026?
What Central Excise Changes Were Announced in Budget 2026?
Did Personal Import Duties Really Go Down in Budget 2026?
What Should CHAs Do Immediately After Budget 2026 Customs Notification?
Frequently Asked Questions — Budget 2026 Customs Duty Exemptions & Changes
1. Budget 2026 Customs Duty Changes — What Are the Three Effective Dates?
Understanding When Each Customs Notification Takes Effect
The Budget 2026 customs changes do not all take effect on a single date. Understanding the three critical effective dates is essential for accurate duty calculation and compliance.
Three Effective Dates to Mark on Your Calendar
February 2, 2026 (Midnight)
• Most customs duty rate changes
• New BCD exemptions for pharma, aviation, and critical minerals
• Baggage Rules 2026 come into force
• Personal import duty reduced from 20% to 10% (Heading 9804)
• Umbrella-specific duty floor introduced
• Customs Act amendments (advance ruling validity, warehouse transfers, fishing jurisdiction)
April 1, 2026
• 22 exemption notifications lapse (solar, fertiliser, petrochemical, banking, leather, transport sectors)
• Social Welfare Surcharge (SWS) applied to personal imports under Heading 9804
• Silicon wafer exemption for solar manufacturing ends
• Multiple sector-specific exemptions expire
May 1, 2026
• Tariffisation becomes effective for 54+ items
• Critical minerals move into First Schedule at Nil BCD
• Turkey meat, almonds, graphite, coal, petroleum crude, ferro-nickel, blister copper, scrap metals, PVC polymers, rayon pulp, cotton, and machinery items shift from exemption notifications to tariff schedule
Why These Dates Matter for CHAs
Immediate Impact (February 2):
Update duty calculators, inform clients of rate changes, implement new specific duty calculations for umbrellas.
Critical Planning Window (February–March):
Alert clients to April 1 exemption lapses, especially in solar, fertiliser, and petrochemical sectors. Clients need to plan inventory before deadlines.
Structural Shift (May 1):
Update classification workflows, tariff databases, and internal SOPs to reflect tariffisation. No more cross-referencing exemption notifications for 54+ items.
Key Statistics: Budget 2026 Customs Changes at a Glance
• 54+ items tariffised (moving from exemptions to First Schedule)
• 22 exemptions lapsed on April 1, 2026
• 17 new oncology drugs exempted from BCD
• 7 new rare diseases added to personal import exemption list
• Export timeline doubled from 6 months to 1 year
• Seafood duty-free limit raised from 1% to 3% of FOB
• Advance ruling validity extended to 5 years
• Diesel excise hike deferred to March 31, 2028
2. Which Items Saw Customs Duty Increases in Budget 2026?
Complete List of Duty Rate Hikes and Lapsing Exemptions
While Budget 2026 focuses primarily on simplification and strategic relief, several items saw duty increases either through direct rate changes or exemption lapses.
Items with Direct Duty Increases (Effective February 2, 2026)
Umbrellas — Specific Duty Floor Introduced
Tariff Heading: 6601 91 00 and 6601 99 00
Old Rate: 20% ad valorem
New Rate: 20% or ₹60 per piece (whichever is higher), and for umbrella parts specifically coming under HSNs 6603 20 00, 6603 90 10 and 6603 90 90 ₹25 per kg if net weight exceeds 1 kg
What this means: Umbrella imports now face a minimum revenue floor. Even if 20% of assessable value is less than ₹60, the importer must pay ₹60 per piece.
CHA Action: Update calculators to compute both ad valorem and specific duty, and apply the higher amount.
Potassium Hydroxide (Caustic Potash)
Tariff Heading: 2815 20 00
Old Rate: Nil
New Rate: 7.5%
Impact Sectors: Fertiliser manufacturing, soap and detergent production, battery manufacturing.
INVAR (Iron-Nickel-Cobalt Alloy)
Tariff Heading: 7227 20 00
Old Rate: 5%
New Rate: 7.5%
Impact Sectors: Precision instruments, LNG infrastructure, aerospace applications.
Video Game Console Parts and Accessories
Tariff Heading: 9504 50 90
Old Rate: 5%
New Rate: 20%
Impact: Fourfold increase, aligned with domestic electronics manufacturing push.
Live Animals and Birds (Except Dogs, Horses, Sheep, Goats)
Tariff Heading: 0106 (excluding specified headings)
Old Rate: Nil
New Rate: 30%
Impact Sectors: Zoos, research institutions, exotic animal trade.
Summary Table: Customs Duty Increases in Budget 2026
Item: Umbrellas
Old Rate: 20%
New Rate: 20% or ₹60/pc + ₹25/kg
Effective Date: February 2, 2026
Item: Potassium hydroxide
Old Rate: Nil
New Rate: 7.5%
Effective Date: February 2, 2026
Item: INVAR alloy
Old Rate: 5%
New Rate: 7.5%
Effective Date: February 2, 2026
Item: Video game parts
Old Rate: 5%
New Rate: 20%
Effective Date: February 2, 2026
Item: Live animals/birds
Old Rate: Nil
New Rate: 30%
Effective Date: February 2, 2026
3. What Are the Customs Duty Cuts in Budget 2026?
Strategic Sectors See Targeted Duty Relief
Budget 2026 provides targeted duty relief in critical minerals, nuclear energy, and personal imports, aligning customs policy with India’s strategic and social priorities.
Items with Duty Cuts (Effective February 2, 2026)
Monazite (Rare Earth Concentrate)
Tariff Heading: 2612 10 00
Old Rate: 2.5%
New Rate: Nil
Strategic Impact:
Monazite is a key source of rare earth elements and thorium. Zero duty supports India’s Critical Minerals Mission and domestic rare earth processing capacity.
Beneficiary Sectors:
Rare earth processing units, thorium-based nuclear programmes, strategic mineral stockpiling.
Sodium Antimonate (Flame Retardant Chemical)
Tariff Heading: 2841 80 90
Old Rate: 7.5%
New Rate: Nil
Industrial Impact:
Used in flame-retardant plastics, cables, textiles, and safety equipment. Manufacturers of fire-resistant electrical cables and industrial safety materials benefit.
Nuclear Fuel Elements and Cartridges
Tariff Heading: 8401 10 00
Old Rate: 7.5%
New Rate: Nil
Energy Sector Impact:
Supports India’s nuclear power expansion plans. This is part of a broader extension of nuclear sector exemptions till 2035.
Personal Imports (Heading 9804)
Tariff Heading: 9804
Old Rate: 20%
New Rate: 10%
Important Caveat:
From April 1, 2026, Social Welfare Surcharge (SWS) will apply to Heading 9804 goods. Net effective duty will be approximately 11%.
Items Covered:
Personal effects imported by post, gifts, small-value personal imports, unaccompanied baggage.
CHA Advisory:
From April 1, calculate both 10% BCD and applicable SWS to determine true landed cost.
Summary Table: Customs Duty Cuts in Budget 2026
Item: Monazite
Old Rate: 2.5%
New Rate: Nil
Effective Date: February 2, 2026
Item: Sodium antimonate
Old Rate: 7.5%
New Rate: Nil
Effective Date: February 2, 2026
Item: Nuclear fuel elements
Old Rate: 7.5%
New Rate: Nil
Effective Date: February 2, 2026
Item: Personal imports (9804)
Old Rate: 20%
New Rate: 10% (+ SWS from April 1)
Effective Date: February 2, 2026
4. Which Pharma and Healthcare Imports Got Duty Exemptions in Budget 2026?
17 New Oncology Drugs and 7 Rare Disease Categories Exempted
Budget 2026 significantly expands duty-free access to life-saving medicines, with a strong focus on cancer treatment and rare diseases.
17 New Oncology Drugs Exempted from Basic Customs Duty
The following advanced cancer therapies are now fully exempt from BCD when imported for specified end-use:
Ribociclib
Abemaciclib
Palbociclib
Venetoclax
Ibrutinib
Acalabrutinib
Zanubrutinib
Pomalidomide
Ixazomib
Daratumumab
Bortezomib
Ipilimumab
Sacituzumab Govitecan
Trastuzumab Deruxtecan
Enfortumab Vedotin
Dostarlimab
Toripalimab
Impact:
These drugs represent some of the most advanced cancer treatments globally. Exempting them from customs duty significantly reduces treatment costs in India.
Compliance Requirements:
• Valid end-use certificate
• CDSCO licence
• Import by registered pharmaceutical manufacturers or approved healthcare institutions
CHA Action:
Ensure complete documentation. These imports are closely scrutinised by Customs and health regulators.
7 New Rare Diseases Added to Personal Import Exemption (List 22)
Patients suffering from the following rare diseases can import prescribed medicines duty-free:
Hereditary Angioedema
Primary Immune Deficiency Disorders
Complement-mediated diseases
Wilson’s Disease
Acute Hepatic Porphyria
Centronuclear Myopathy
X-Linked Myotubular Myopathy
Documentation Required:
• Prescription from registered medical practitioner
• Medical certificate confirming diagnosis
• Declaration of personal use and non-commercial nature
CHA Advisory:
Personal imports under List 22 are highly sensitive. Extra care is required in documentation and declarations.
Existing Pharma Exemptions Extended
All existing exemptions on life-saving drugs, vaccines, diagnostics, and specified medical equipment have been extended till March 31, 2028.
5. How Does Budget 2026 Impact Solar, EV and Green Energy Imports?
Major Relief with Critical Sunset Clauses
The renewable energy sector sees a combination of new exemptions, expanded coverage, and significant exemption lapses.
Critical Alert: Silicon Wafer Exemption Ending April 1, 2026
Tariff Heading: 3818 00
Status till March 31, 2026: Nil BCD
Status from April 1, 2026: Standard tariff rate applies
Impact:
Solar cell manufacturers importing silicon wafers will face immediate cost escalation after March 31.
CHA Action (URGENT):
Alert all solar manufacturing clients immediately. Recommend front-loading wafer imports before March 31.
PoE Encapsulants Now Exempted
Tariff Heading: 3920 10 90 (when used for solar modules)
Old Status: Dutiable
New Status: Nil BCD (from February 2, 2026)
Impact:
Polyolefin Elastomer (PoE) encapsulants now receive the same treatment as EVA encapsulants, ensuring cost parity.
Compliance:
End-use certificate specifying manufacture of solar modules is mandatory.
Battery Energy Storage System (BESS) Capital Goods Coverage Expanded
Capital goods used for manufacturing Battery Energy Storage Systems are now included under Nil BCD exemption.
Impact:
Supports grid-scale storage and renewable integration projects.
CHA Advisory:
Ensure correct classification and capital goods eligibility with proper end-use certification.
Copper Rods for Solar Ribbon Manufacturing Exempted
Tariff Heading: 7408 11 00
New Status: Nil BCD (for solar ribbon manufacture)
Impact:
Reduces cost for solar cell interconnect ribbon manufacturers.
EV and Battery Exemptions Extended
All other EV and lithium-ion battery-related exemptions have been extended till March 31, 2028.
Summary: Solar and EV Changes in Budget 2026
Silicon wafers: Exemption lapsing April 1, 2026
PoE encapsulants: Newly exempted
BESS capital goods: Coverage expanded
Copper rods (solar ribbon): Newly exempted
Other EV/battery exemptions: Extended till March 2028
6. What Changed for Critical Minerals Imports in Budget 2026?
54+ Critical Minerals Tariffised at Nil BCD — A Strategic Shift
Budget 2026 embeds long-term duty relief for critical minerals by moving them from exemption notifications into the Customs Tariff itself at Nil Basic Customs Duty.
What Are Critical Minerals and Why Do They Matter?
Critical minerals are essential inputs for advanced manufacturing sectors such as:
• Electric vehicle batteries
• Semiconductors and electronics
• Defence and aerospace
• Renewable energy systems
• High-end industrial manufacturing
India is heavily import-dependent for these materials. Budget 2026 focuses on supply security and domestic value addition.
54+ Critical Mineral Items Being Tariffised at Nil BCD (Effective May 1, 2026)
Rare Earth Elements and Compounds
• Rare earth metals, scandium and yttrium
• Cerium compounds
• Neodymium compounds
• Praseodymium compounds
• Lanthanum compounds
Lithium Compounds
• Lithium carbonate
• Lithium hydroxide
• Lithium chloride
• Lithium fluoride
Cobalt Compounds
• Cobalt oxides and hydroxides
• Cobalt chlorides
• Cobalt sulphates
• Cobalt carbonates
Battery and Semiconductor Materials
• Tellurium
• Selenium
• Silicon (metal and powder forms)
• Germanium
• Gallium
• Indium
Strategic Metals
• Vanadium oxides and hydroxides
• Molybdenum oxides and hydroxides
• Antimony compounds
• Cadmium compounds
• Niobium (columbium) oxides
Alloys and Refined Forms
• Unwrought cobalt and cobalt mattes
• Tungsten bars, rods and wire
• Titanium bars, rods and wire
• Ferro-nickel
Fresh Duty Cut: Monazite
Tariff Heading: 2612 10 00
Old Rate: 2.5%
New Rate: Nil
Effective Date: February 2, 2026
Strategic Impact:
Monazite is a key source of rare earth elements and thorium. This immediate duty cut strengthens India’s rare earth and nuclear material ecosystem.
Why Tariffisation Matters for Critical Minerals
Old System:
Duty concessions were granted through exemption notifications. CHAs had to cross-verify multiple notifications.
New System (from May 1, 2026):
Nil duty is embedded directly into the First Schedule of the Customs Tariff Act.
Benefits:
• Single-step duty lookup
• Long-term certainty
• Lower compliance risk
• Reduced disputes on exemption eligibility
Alignment with India’s Critical Minerals Mission
The tariffisation move supports:
Supply chain security for battery and semiconductor materials
Domestic processing and refining
EV, renewable energy, and electronics manufacturing growth
CHA Action Points for Critical Minerals
• Update tariff databases by April 30, 2026
• Inform battery, semiconductor and rare-earth clients
• Ensure precise HS classification (many overlapping codes)
• Monitor future tariff amendments (changes will now be more visible)
7. What Is Tariffisation and How Does It Affect Customs Clearance?
The Biggest Structural Reform in Budget 2026
Tariffisation is the most important procedural reform introduced in Budget 2026.
What Is Tariffisation?
Earlier System:
Look up base tariff rate in First Schedule
Cross-check exemption notifications
Apply concessional rate if eligible
Tariffised System (from May 1, 2026):
Concessional rates are embedded directly in the First Schedule itself.
Key Point:
The duty rate does not change. Only the mechanism changes.
Categories Covered Under Tariffisation
Food and Agriculture:
• Turkey meat
• Almonds and walnuts
• Edible oils (specified grades)
Raw Materials and Minerals:
• Natural graphite
• Coal and coal products
• Petroleum crude and fractions
• Ferro-nickel
• Blister copper
• Metal scrap (lead, zinc)
Polymers and Chemicals:
• PVC polymers
• Rayon pulp
Textiles:
• Cotton (various grades)
Machinery and Components:
• Nuclear reactors and parts
• Air-conditioning components
• Battery separators
Critical Minerals:
(Refer to Section 6 for complete list)
Tariffisation Example: Blister Copper
Earlier:
Tariff rate: 5%
Exemption notification: Nil
Applied rate: Nil
From May 1, 2026:
Tariff rate in First Schedule: Nil
Applied rate: Nil
Result:
Same duty outcome, simpler compliance.
Impact on CHAs
Advantages:
• Simplified classification
• No notification cross-checking
• Lower litigation risk
Challenges:
• Transition-period confusion
• April–May shipment cut-off issues
How CHAs Should Prepare
Update tariff reference systems
Train classification teams
Inform clients that rates are unchanged
Monitor late April / early May clearances closely
8. Which Customs Duty Exemptions Were Extended, Lapsed or Removed in Budget 2026?
Complete Exemption Review Snapshot
• 102 exemptions extended
• 22 exemptions lapsed
• 14 unconditional exemptions removed
102 Exemptions Extended Till March 31, 2028
Sectors Covered:
• Aviation
• Defence
• Pharmaceuticals
• Renewable energy
• Agriculture
• Infrastructure
• Research and development
CHA Action:
No immediate change. Update expiry date to March 31, 2028.
22 Exemptions Lapsed on April 1, 2026
Solar Sector:
• Silicon wafers
• Inputs for solar tempered glass
• Inputs for solar back-sheets
Fertiliser and Chemicals:
• Crude glycerin
• MDEA
• Zinc ash and dross
Petrochemical:
• Naphtha
• Petroleum fractions
Banking and IT:
• ATM components
• Specified ITA-1 goods
Others:
• SRF pellets
• Transformer inputs
• Leather boot uppers
• Hybrid and non-CNG buses
CHA Alert:
These items now attract standard tariff rates from April 1, 2026.
14 Unconditional Exemptions Removed
Nature of Items:
• Low-impact exemptions
• Items with sufficient domestic availability
• Redundant due to tariffisation
CHA Action:
Refer official notification and update tariff files.
Critical Sectors to Watch Closely
• Solar manufacturing (silicon wafers)
• Fertiliser inputs
• Petrochemical feedstock
• Banking infrastructure imports
9. What Export Benefits Were Announced in Union Budget 2026?
Extended Timelines, Expanded Coverage and Reduced Compliance Burden
Budget 2026 introduces practical, exporter-friendly reforms focused on timelines, eligibility expansion, and liquidity improvement.
Export Timeline Doubled: 6 Months to 1 Year
Earlier Rule:
Export of goods manufactured from duty-free imported inputs had to be completed within 6 months.
New Rule:
Export timeline extended to 1 year.
Impact:
• Greater flexibility for complex manufacturing cycles
• Relief for exporters facing global supply chain delays
• Reduced compliance stress
• Better planning for seasonal and project-based exports
Beneficiary Sectors:
Textiles, engineering goods, electronics, pharmaceuticals, auto components.
CHA Action:
Update export obligation tracking systems to reflect the 1-year timeline.
Shoe-Uppers Now Covered Under Footwear Input Exemption
Earlier:
Shoe-uppers were not explicitly included under footwear input exemptions.
Now:
Shoe-uppers are explicitly covered.
Impact:
• Reduced input cost for footwear exporters
• Better competitiveness in global markets
Compliance Requirement:
End-use certificate confirming manufacture of footwear for export.
Seafood Duty-Free Import Limit Raised
Earlier Limit:
1% of previous year’s FOB export value
New Limit:
3% of previous year’s FOB export value
Impact:
• Threefold increase in duty-free input allowance
• Improved margins for seafood exporters
Applicable Inputs:
Packaging material, processing chemicals, cold storage equipment.
CHA Action:
Recalculate entitlement for all seafood exporters based on previous year FOB value.
GST Refund Threshold Removed
Earlier:
IGST refunds were subject to a minimum threshold.
Now:
Threshold completely removed.
Impact:
• Exporters can claim refunds of any amount
• Improved liquidity for small exporters
• Faster working capital cycle
CHA Advisory:
Coordinate with clients’ GST teams to ensure this benefit is utilised.
Summary of Export Benefits
Export timeline: Extended to 1 year
Footwear inputs: Shoe-uppers included
Seafood imports: Limit increased to 3% of FOB
GST refunds: No minimum threshold
CHA Action Checklist for Exporters
• Update export obligation timelines
• Inform footwear exporters of new coverage
• Recalculate seafood import limits
• Coordinate GST refund claims
10. What Changed for Aviation, Defence and Nuclear Imports in Budget 2026?
Long-Term Certainty for Strategic Sectors
Budget 2026 strengthens strategic industries through new exemptions and long-term extensions.
New Exemptions for Aviation Sector
Raw Materials for Aircraft MRO (Defence PSUs Only)
• Nil Basic Customs Duty
• Applicable only to Defence Public Sector Undertakings
• End-use certification mandatory
Impact:
Lower maintenance costs for defence aviation assets.
Components, Parts and Engines for Aircraft Manufacturing
• Nil Basic Customs Duty
• Applicable to registered aircraft manufacturers
Impact:
Supports domestic aircraft manufacturing initiatives.
All Aviation Exemptions Extended
Validity extended till March 31, 2028.
Coverage includes:
• Aircraft parts and assemblies
• MRO tools and test equipment
• Satellite and space equipment
• Drone and RPA components (subject to clarification)
Nuclear Sector Exemptions Extended Till 2035
All exemptions relating to nuclear energy imports extended till March 31, 2035.
Coverage includes:
• Nuclear fuel elements
• Reactor parts
• Safety and control systems
• Specified radioactive materials
Impact:
Provides long-term certainty for nuclear power expansion projects.
Defence Sector Exemptions Retained
All existing defence-related exemptions extended till March 31, 2028.
Coverage includes:
• Defence PSU imports
• DRDO research equipment
• Armed forces operational imports
Summary: Strategic Sector Changes
Aviation: New exemptions + extensions till 2028
Nuclear: Exemptions extended till 2035
Defence: Exemptions retained till 2028
CHA Action Points
• Update exemption validity dates
• Verify PSU and manufacturer eligibility
• Ensure end-use certificates are complete
• Track upcoming clarification circulars
11. What Are the Key Customs Act Amendments in Budget 2026?
Procedural Simplification, Legal Certainty and Faster Logistics
Budget 2026 introduces several amendments to the Customs Act aimed at reducing friction, improving certainty, and modernising customs operations.
1. Extension of Fishing Vessel Jurisdiction
Amendment:
The definition of “India” under Section 2(27) of the Customs Act has been expanded to include maritime zones beyond the Exclusive Economic Zone where India has jurisdiction under international law.
Impact:
• Enables stronger action against illegal fishing and maritime smuggling
• Improves enforcement in extended maritime zones
CHA Relevance:
Limited to clients dealing with fishing vessels or offshore operations. No impact on routine imports.
2. Advance Ruling Validity Extended to 5 Years
Amendment:
Advance rulings under Section 28J will now be valid for 5 years, or until the law or facts change.
Earlier:
Shorter and less predictable validity periods.
Now:
Five-year certainty on classification, valuation, and origin issues.
Impact for Importers:
• Reduced litigation risk
• Long-term planning certainty
• Lower chances of retrospective duty demands
CHA Recommendation:
Proactively advise advance rulings for complex or high-value imports.
3. Warehouse Transfer Permission Removed
Amendment:
Section 67 amended to remove the requirement of prior permission from the proper officer for transfer of goods between bonded warehouses.
Earlier:
Case-by-case approvals caused delays.
Now:
Transfers allowed subject to prescribed conditions, without prior permission.
Impact:
• Faster bonded logistics
• Reduced paperwork
• Improved efficiency for pharma, chemical, and cold storage sectors
CHA Action:
Update SOPs and remove permission workflow from warehouse transfer processes.
4. Deferred Payment of Customs Duty Made Monthly
Amendment:
Deferred payment of customs duty will now operate on a monthly basis.
Impact:
• Simplifies accounting
• Aligns with monthly financial cycles
• Improves cash flow management
Applicable To:
Importers eligible for deferred payment schemes.
5. New Baggage Rules, 2026 Introduced
Effective Date:
Midnight, February 2, 2026.
Key Improvements:
• Consolidated framework for baggage declarations and processing
• Clear rules for temporary imports and re-export
• Restructured Transfer of Residence benefits
• Removal of ambiguities from 2016 rules
Impact:
Greater clarity for personal imports, travellers, and expatriate relocations.
CHA Action:
Update baggage clearance SOPs and train frontline teams.
Summary: Customs Act Amendments
Fishing jurisdiction expanded
Advance ruling validity extended to 5 years
Warehouse transfer permission removed
Deferred payment shifted to monthly cycle
New Baggage Rules 2026 notified
12. What GST Changes Affect Import-Export in Budget 2026?
Improved Valuation, Faster Refunds and Clarity on Services
Although primarily a customs budget, several GST changes directly affect importers and exporters.
1. Post-Sale Discount Agreement Requirement Removed
Amendment:
CGST Act Section 15 amended to remove the requirement of a pre-existing agreement for post-sale discounts.
Earlier:
Written agreement mandatory.
Now:
Discounts can be excluded from taxable value if known at the time of supply.
Impact:
• Simplifies GST valuation
• Reduces documentation burden
• Helps industries with variable pricing structures
CHA Advisory:
Inform clients dealing with post-import pricing adjustments.
2. Provisional Refund Allowed for Inverted Duty Structure
Amendment:
Provisional refunds now permitted for inverted duty structure cases.
Impact:
• Faster refunds
• Improved working capital
• Reduced cash flow blockage
Beneficiary Sectors:
Textiles, pharmaceuticals, food processing, electronics.
3. Intermediary Services Clarified
Amendment:
Definition and tax treatment of intermediary services clarified under GST law.
Impact:
• Reduced disputes on place of supply
• Clearer GST liability for service providers
CHA Relevance:
CHA firms providing intermediary services should review GST classification with advisors.
Summary: GST Changes
Post-sale discount rules simplified
Provisional refund introduced for inverted duty
Intermediary service treatment clarified
13. What Central Excise Changes Were Announced in Budget 2026?
Limited Changes with Key Deferrals
1. Tobacco NCCD Revised
Change:
Rates of National Calamity Contingent Duty revised on tobacco products.
Impact:
Affects importers and manufacturers of cigarettes and other tobacco products.
CHA Action:
Update excise calculators for tobacco-related imports.
2. Bio-CNG Excise Computation Clarified
Change:
Method of excise duty calculation for bio-CNG clarified.
Impact:
• Reduced disputes
• Easier compliance for bio-CNG producers
3. Diesel Excise Hike Deferred
Change:
Additional excise duty of ₹2 per litre on unblended diesel deferred till March 31, 2028.
Impact:
• No increase in diesel costs till 2028
• Positive for logistics and transport sectors
CHA Impact:
Operational transport costs remain stable.
Summary: Central Excise Changes
Tobacco NCCD revised
Bio-CNG computation clarified
Diesel excise hike deferred till 2028
14. Did Personal Import Duties Really Go Down in Budget 2026?
Heading 9804 Reduced, But With a New Surcharge Component
Budget 2026 announces a headline reduction in customs duty on personal imports. However, the introduction of Social Welfare Surcharge (SWS) slightly offsets this benefit.
The Headline Change
Tariff Heading: 9804 (Articles imported by post or as baggage)
Old Rate:
Basic Customs Duty (BCD) at 20%
New Rate (from February 2, 2026):
Basic Customs Duty (BCD) at 10%
Additional Levy (from April 1, 2026):
Social Welfare Surcharge (SWS) applicable
What This Means in Practice
February 2 to March 31, 2026:
• BCD at 10%
• No SWS
• Total duty = 10%
From April 1, 2026 onwards:
• BCD at 10%
• SWS at approximately 10% of BCD
• Effective duty approximately 11%
Comparison with Old Regime
Before February 2, 2026:
• BCD at 20%
• Total duty = 20%
After April 1, 2026:
• Total duty approximately 11%
Net Savings:
Approximately 9 percentage points reduction.
Items Covered Under Heading 9804
• Personal effects imported by post
• Gifts sent by relatives or friends abroad
• Small-value personal imports
• Unaccompanied baggage
• Courier imports for personal use
Illustrative Example
Item: Personal laptop imported by post
Assessable value: ₹50,000
Before Budget 2026:
BCD at 20% = ₹10,000
Total duty = ₹10,000
February 2 to March 31, 2026:
BCD at 10% = ₹5,000
Total duty = ₹5,000
From April 1, 2026:
BCD at 10% = ₹5,000
SWS at 10% of BCD = ₹500
Total duty = ₹5,500
Net saving compared to old system: ₹4,500
Impact of Baggage Rules 2026
The new Baggage Rules 2026 also apply to personal imports and bring clarity on:
• Declaration requirements
• Processing timelines
• Temporary imports and re-export
• Transfer of Residence benefits
CHA Advisory on Personal Imports
• Update calculators for 10% BCD
• Add SWS calculation from April 1
• Educate clients that duty is reduced, but not by a full 50%
• Ensure compliance with Baggage Rules 2026
15. What Should CHAs Do Immediately After Budget 2026 Customs Notification?
A Practical Action Plan for Customs Clearing Agents
This section converts Budget 2026 into an operational checklist for CHAs.
1. Audit All In-Transit Shipments Immediately
Action Steps:
• Identify all shipments currently in transit
• Check likely bill of entry dates
• Flag shipments clearing after:
– February 2 (rate changes)
– April 1 (22 exemptions lapse)
– May 1 (tariffisation)
High-Risk Items:
• Silicon wafers for solar
• Umbrellas (specific duty floor)
• Personal imports under Heading 9804
• Fertiliser, petrochemical and banking inputs
2. Update Tariff Reference Files in Three Phases
Phase 1 – By February 15, 2026
• Update all February 2 rate changes
• Add umbrella-specific duty logic
• Update pharma and critical mineral exemptions
Phase 2 – By March 31, 2026
• Flag all 22 lapsing exemptions
• Prepare revised landed cost sheets
• Issue client advisories
Phase 3 – By April 30, 2026
• Implement tariffisation for 54+ items
• Shift rates into First Schedule references
• Train classification teams
3. Client Communication Priorities
Urgent Alerts (Before March 15):
• Solar manufacturers – silicon wafer exemption lapsing
• Fertiliser importers – MDEA and zinc exemptions ending
• Petrochemical sector – naphtha exemption lapse
• Banks – ATM component exemption lapse
Standard Advisories:
• Exporters – export timeline extended to 1 year
• Footwear exporters – shoe-uppers now covered
• Seafood exporters – 3% duty-free input limit
• Personal import clients – revised duty structure
4. Internal Process Changes
Bonded Warehouses:
• Remove permission requirement from SOPs
• Ensure compliance with prescribed conditions
Advance Rulings:
• Promote advance rulings as a strategic service
• Highlight 5-year validity advantage
Personal Imports:
• Update baggage clearance SOPs
• Train staff on new Baggage Rules
5. Classification and Compliance Focus Areas
• Umbrella classification disputes
• Critical mineral HS code precision
• End-use certificate scrutiny
• Tariffised item transition period
6. Opportunities for CHAs to Add Value
• Inventory planning advisory for exemption lapses
• Advance ruling services
• Export optimisation consulting
• Tariffisation training for clients
16. Frequently Asked Questions — Budget 2026 Customs Duty Exemptions & Changes
Q1. What are the most important customs duty changes in Union Budget 2026 for importers?
The five most critical changes are:
• Tariffisation of 54+ items — structural simplification without changing duty rates
• 22 exemptions lapsing from April 1, 2026 — especially solar, fertiliser, petrochemical, banking sectors
• Nil BCD for critical minerals — lithium, cobalt, rare earths embedded into tariff
• 17 new oncology drugs exempted — major relief for healthcare imports
• Umbrella-specific duty floor — minimum duty of ₹60 per piece introduced
Q2. What is tariffisation and how does it affect customs clearance?
Tariffisation means concessional duty rates are moved from exemption notifications directly into the Customs Tariff Schedule.
What changes:
• Duty rate location
• Compliance mechanism
What does not change:
• Actual duty payable
Impact on CHAs:
• Faster classification
• Fewer disputes
• No exemption cross-checking for tariffised items
Q3. Which solar and EV imports are affected in Budget 2026?
Major changes include:
• Silicon wafer exemption lapsing on March 31, 2026
• PoE encapsulants newly exempted
• BESS capital goods covered under Nil BCD
• Copper rods for solar ribbon exempted
• Other EV and battery exemptions extended till 2028
Urgent Note:
Solar manufacturers must front-load silicon wafer imports before April 1.
Q4. What export benefits are available under Budget 2026?
Key benefits include:
• Export timeline extended from 6 months to 1 year
• Shoe-uppers included under footwear exemption
• Seafood duty-free import limit raised to 3% of FOB
• GST refund threshold removed
Q5. How do the Baggage Rules 2026 impact personal imports?
The new rules provide:
• Clear declaration procedures
• Better treatment of temporary imports
• Structured Transfer of Residence benefits
• Reduced interpretational ambiguity
Applicable from midnight of February 2, 2026.
Q6. Are duties on lithium, cobalt and rare earths reduced?
Yes.
• All major critical minerals are now at Nil BCD
• 54+ items tariffised into the First Schedule
• Monazite duty cut from 2.5% to Nil
This supports India’s EV, semiconductor, and renewable energy ecosystem.
Q7. How are in-transit shipments affected by new rates?
Duty is determined based on the date of filing the bill of entry, not shipment or arrival date.
CHA Action:
Track all shipments clearing after February 2, April 1, and May 1.
Q8. Did personal import duty really reduce from 20% to 10%?
Yes, but with a caveat.
• BCD reduced to 10% from February 2, 2026
• Social Welfare Surcharge applies from April 1
Net effective duty: approximately 11%
Net savings: approximately 9%
Q9. Which pharma imports are now duty-free?
• 17 oncology drugs exempted for commercial imports
• 7 rare diseases added to personal import exemption list
• Existing pharma exemptions extended till 2028
Strict documentation and CDSCO compliance required.
Q10. What does the 5-year advance ruling validity mean for importers?
• Long-term certainty on classification and valuation
• Reduced litigation risk
• Strong planning tool for high-value or complex imports
CHAs should actively recommend advance rulings as a premium service.
Conclusion: What Budget 2026 Means for Importers, Exporters and CHAs
Union Budget 2026–27 is not a rate-heavy budget. It is a structural, compliance-focused, and strategy-driven customs budget.
Key Takeaways:
• Tariffisation simplifies compliance without increasing cost
• Exemption lapses require immediate planning
• Critical minerals and healthcare receive strong support
• Exporters benefit from flexibility and liquidity
• CHAs move from clearance agents to strategic advisors
Those who act early will minimise risk and maximise opportunity.
Published by:
Sunshine Cargo Services Pvt. Ltd.
Licensed Customs House Agent
Kolkata, India
Publication Date: February 2, 2026
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