Modi government's 'budget masterplan': Customs duty slabs to be reduced, imported goods may become cheaper..

Union Budget 2026: The budget countdown has begun. Several details are emerging regarding the preparations for the upcoming budget. According to sources familiar with the matter, the government is considering reducing the number of customs duty slabs from the current eight to five or six in the upcoming budget. This change is aimed at simplifying the tariff structure, reducing litigation, and aligning import duties with the country's industrial and trade priorities.

They explained that the main objective of this process is to resolve disputes related to customs classification, correct inverted duty structures, and reduce discretionary exemptions. This move is being undertaken in light of recently concluded and currently ongoing trade deals, as well as the government's efforts to promote a paperless and streamlined customs system.

Preparation for Major Reforms
The central government has been consistently focusing on reforming the customs structure over the past two years by reducing slabs and eliminating exemptions. A senior official told media reports that comprehensive reforms were introduced in the customs structure in the last budget. There is scope to further reduce the customs duty slabs to five or six. He added that efforts in this regard have been underway for the past three to four months.

An announcement is expected in this year's budget. According to sources, the Central Board of Indirect Taxes and Customs (CBIC) is working on aligning customs duties with the revised GST for a smoother and more consistent system. They said that the department is working to resolve all the issues raised by businesses.

Focus on Reducing Disputes
Media reports, citing sources, also stated that the central government is trying to redefine the tariff structure between Special Economic Zones (SEZs) and the Domestic Tariff Area. This is part of broader SEZ reforms. Officials said that the government's entire focus is on reducing disputes, which later become a major cause of litigation. According to a report by the Parliamentary Standing Committee on Finance, a total of 75,592 customs cases were pending as of December 2024, involving recoverable dues amounting to ₹24,016.20 crore.

He stated that efforts in this regard have been underway for the past three to four months, and an announcement is expected in this year's budget. Industry representatives have advocated for an amnesty scheme to reduce litigation in cases where the dispute does not involve deliberate tax evasion. Finance Minister Nirmala Sitharaman had indicated last month that simplification of customs procedures would be the next major focus of the government's reform agenda.

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