Union Budget 2026: Customs & Trade Facilitation Amendments – Topic-wise Summary with Key Changes (Before vs After)
Union Budget 2026 has introduced a wide set of Indirect Tax proposals. While a significant portion of the Budget speech focuses on Customs tariff rationalisation, exemption review and trade facilitation measures, the GST / IGST legislative amendments proposed through the Finance Bill, 2026 are limited in number but important in impact—primarily covering post-sale discounts, credit note linkage, refund rationalisation, interim appellate mechanism for advance rulings, and place of supply for intermediary services.
Accordingly, this article provides a clear, topic-wise summary of the GST / IGST law changes (Annexure B: B1 to B6), with section references, “before vs after” position, and key practical implications for taxpayers and professionals. Please note that most GST changes will take effect from a date to be notified (as GST implementation requires coordination with States and GST Council recommendations), except where a specific effective date is expressly stated (e.g., 01.04.2026 for the interim appellate arrangement).
The relevant Budget speech extract / annexure is attached/reproduced for ready reference. If you have any doubt or query on applicability, documentation, or impact on your transactions, feel free to contact me at the details mentioned at the end of the article.
A1. Budget Speech – Policy intent + Exemptions + Tariff simplification (Para 1–3)
Topic |
What announced |
Before |
After / New position |
Para No. |
Key impact |
Effective date |
Overall intent |
Simplify tariff, support domestic manufacturing, promote export competitiveness, correct inversion in duty |
— |
— |
1 |
Policy direction for Customs/Central Excise |
— |
Review of exemptions |
Remove long-continuing exemptions where goods are manufactured in India / imports negligible |
Exemptions existed |
Exemptions to be removed (selected items) |
2 |
Rationalisation; fewer distortions |
— |
Tariff simplification |
Shift certain “effective rates” from notifications into tariff schedule |
Rates in notifications |
Effective rates incorporated into tariff schedule |
3 |
Easier duty rate ascertainment |
— |
A2. Export Promotion (Budget Speech Para 4–6 + Annexure D)
| Topic | What announced | Before | After / New position | Para / Ref | Key impact | Effective date |
| Seafood processing inputs | Increase duty-free import limit for specified inputs used for seafood exports | 1% of prior year FOB export turnover | 3% of prior year FOB export turnover | Para 4 / D.1 | Greater duty-free input access; export boost | — |
| Shoe uppers | Extend duty-free input benefit to exports of shoe uppers | Not covered | Covered | Para 5 / D.3 | Supports leather export value chain | — |
| Export time limit | Extend time period for export of final product | 6 months | 12 months / 1 year | Para 6 / D.2 | Better compliance feasibility for exporters | — |
A3. Sector-specific Customs Duty Relief (Budget Speech Para 7–15)
Topic |
What announced |
Before |
After / New position |
Para No. |
Key impact |
Effective date |
Li-ion cells (BESS) |
Extend BCD exemption on capital goods used for Li-ion cells to BESS also |
Exemption existed for Li-ion cells (batteries) |
Extended to Li-ion cells for Battery Energy Storage Systems (BESS) |
7 |
Supports energy storage manufacturing |
— |
Solar glass input |
Exempt BCD on sodium antimonate for solar glass |
BCD applicable |
BCD exempt |
8 |
Lower solar input cost |
— |
Nuclear power |
Extend and expand BCD exemption for nuclear power project imports |
Existing exemption (limited) |
Extended till 2035; expanded for all plants irrespective of capacity |
9 |
Lower nuclear capex; long runway |
— |
Critical minerals |
BCD exemption on capital goods required for processing critical minerals |
BCD applicable |
BCD exempt |
10 |
Encourages domestic processing |
— |
Civil aviation |
Exempt BCD on components/parts for manufacture of aircraft |
BCD applicable |
BCD exempt |
12 |
Supports domestic aircraft manufacturing |
— |
Defence aviation (MRO) |
Exempt BCD on raw materials for manufacture of aircraft parts used in MRO by defence sector units |
BCD applicable |
BCD exempt |
13 |
Strengthens defence MRO ecosystem |
— |
Electronics (microwave ovens) |
Exempt BCD on specified parts for microwave ovens |
BCD applicable |
BCD exempt |
14 |
Deepens value addition |
— |
SEZ – one-time DTA facilitation |
Allow eligible SEZ units to sell in DTA at concessional duty, capped by export proportion |
Normal rules |
One-time concessional duty (limited proportion) |
15 |
Capacity utilisation with level-playing field safeguards |
— |
A4. Ease of Living – Personal Imports + Patient Relief (Budget Speech Para 16–18 + Rate Table C.1)
Topic |
What announced |
Before |
After / New position |
Para / Ref |
Key impact |
Effective date |
Personal imports tariff |
Reduce tariff rate on dutiable personal imports |
20% (speech) |
10% |
Para 16 / C.1(12) |
Passenger relief; simplified rate |
01.04.2026 (as per rate table) |
17 drugs/medicines |
Exempt BCD on 17 drugs/medicines |
5%/10% (as per rate table) |
Nil |
Para 17 / C.1(10) |
Patient relief |
02.02.2026 |
Rare diseases |
Add 7 rare diseases for duty exemption on personal imports of drugs/medicines/FSMP |
Limited list |
Expanded list (+7 diseases) |
Para 18 / C.1(11) |
Relief for rare disease treatment |
02.02.2026 |
A5. Customs Process Reforms – Trust-based + Digital + Warehousing (Budget Speech Para 19–30)
Topic |
What announced |
Before |
After / New position |
Para No. |
Key impact |
Effective date |
Reform intent |
Minimal intervention, faster movement, greater certainty |
— |
— |
19 |
Framework for reforms |
— |
AEO duty deferral |
Enhance duty deferral for Tier 2 & Tier 3 AEOs |
15 days |
30 days |
20 |
Cashflow relief to trusted importers |
— |
Manufacturer-importers deferral |
Extend duty deferral to eligible manufacturer-importers |
Not available / limited |
Same facility extended |
21 |
Encourages Tier-3 AEO accreditation |
— |
Advance ruling validity |
Extend validity of advance ruling binding on Customs |
3 years |
5 years |
22 |
Better certainty & planning |
— |
Govt agencies + AEO |
Encourage agencies to leverage AEO accreditation |
Not structured |
Preferential treatment encouraged |
23 |
Faster clearance for accredited entities |
— |
Risk recognition + e-seal exports |
Recognise trusted importers; reduce repeated verification; factory-to-ship clearance for e-sealed exports |
Higher verification |
Reduced checks; end-to-end clearance |
24 |
Faster movement; lower friction |
— |
Auto release on arrival |
If no compliance: BoE filing + goods arrival auto-notifies customs; immediate release |
Officer-led clearance |
Auto-triggered immediate release |
25 |
Immediate release; efficiency |
— |
Warehousing model shift |
Warehouse operator-centric system; self-declarations; electronic tracking; risk-based audit |
Officer-dependent approvals |
Self-declaration + risk audit model |
26 |
Lower delays and compliance costs |
— |
Single digital window |
Integrated window for multi-agency approvals; 70% interdicted cargo processes by April 2026 |
Fragmented |
Single, interconnected digital window |
27 |
Major EoDB improvement |
End of FY; April 2026 milestone |
No-compliance goods |
Clearance immediately after online registration + duty payment |
Slower |
Immediate clearance |
28 |
Faster clearance |
— |
CIS |
Roll out Customs Integrated System in 2 years |
Multiple systems |
Single integrated scalable platform |
29 |
Systems consolidation |
Within 2 years |
Scanning + AI |
Expand scanning using advanced imaging & AI; aim to scan every container at major ports (phased) |
Partial |
Expanded scanning coverage |
30 |
Better risk assessment and speed |
Phased |
A6. New Export Opportunities + Courier Exports + Baggage Rules (Budget Speech Para 31–33 + Customs Rules A.3)
Topic |
What announced |
Before |
After / New position |
Para / Ref |
Key impact |
Effective date |
High seas fishing (duty-free catch) |
Fish catch by Indian vessel in EEZ/High Seas duty-free; foreign port landing treated as export; safeguards |
Duty/uncertain treatment |
Duty-free + export recognition + safeguards |
Para 31 |
New export opportunity for fishermen |
— |
Courier exports cap |
Remove ₹10 lakh per consignment cap; improve handling of returns/rejects |
₹10 lakh cap |
Cap removed; tech-enabled returns/rejects |
Para 32 / A.3(iii)-(v) |
Boost MSME/startup e-commerce exports |
— |
Baggage rules revision |
Revise baggage rules, enhance duty-free allowances, clarify temporary carriage |
Existing rules |
Revised rules + new baggage rules issued |
Para 33 / A.3(i) |
Passenger clarity and relief |
— |
A7. Dispute Closure (Budget Speech Para 34)
| Topic | What announced | Before | After / New position | Para No. | Key impact | Effective date |
| Settlement by additional amount | Close cases by paying additional amount in lieu of penalty | Penalty stigma | Additional amount route for closure | 34 | Encourages dispute resolution | — |
A8. Annexure – Customs Act, 1962 Amendments (A.1)
Topic |
What announced |
Before |
After / New position |
Section / Ref |
Key impact |
Effective date |
Extra-territorial jurisdiction |
Extend jurisdiction beyond territorial waters for fishing |
Within territorial waters |
Beyond territorial waters (for fishing activities) |
s.1(2) |
Enables legal framework for high seas fishing |
From assent |
Definition |
Define “Indian-flagged fishing vessel” |
Not defined |
Definition inserted |
s.2 |
Removes ambiguity |
From assent |
Penalty treated as charge |
Penalty paid u/s 28(5) deemed charge for non-payment of duty |
Not treated as charge |
Deemed charge for non-payment of duty |
s.28(6) with s.28(5) |
Impacts settlement outcomes |
From assent |
Advance ruling validity |
Extend validity of advance ruling |
3 years |
5 years / till change in law or facts (earlier) |
s.28J(2) |
Certainty |
From assent |
Extension of existing rulings |
Extend existing rulings on request |
Not available |
Extend to 5 years from ruling date on request |
Proviso to s.28J(2) |
Transition relief |
From assent |
New fishing framework |
Insert special provisions beyond territorial waters |
No dedicated section |
s.56A inserted (duty-free import; export treatment; procedure rules) |
New s.56A |
Structured compliance & safeguards |
From assent |
Warehouse transfer |
Remove prior permission for transfer between warehouses |
Prior permission required |
s.67 substituted (transfer subject to prescribed conditions) |
Substitute s.67 |
Faster movement |
From assent |
Custody regulation |
Enable custody provisions under regulations |
Limited |
“custody, examination” enabled |
s.84(b) |
Regulatory empowerment |
From assent |
A9. Annexure – Customs Tariff Act changes (A.2)
Topic |
What announced |
Before |
After / New position |
Ref |
Key impact |
Effective date |
Tariff entries |
Add/amend/delete tariff entries |
Existing schedule |
148 new entries; 54 substituted/deleted; 2 amended (Ch 29), 1 amended (Ch 85) |
First Schedule |
Better classification |
Mixed: 02.02.2026 / 01.04.2026; structural 01.05.2026 unless specified |
Rate rationalisation |
Modify rates for certain items |
Existing rates |
Modifications in parts |
First Schedule |
Rationalisation |
02.02.2026 / 01.04.2026 (as specified) |
Shift effective BCD into schedule |
Operationalise effective rates in Tariff instead of notifications |
Reliance on exemptions |
New lines; amended lines; no effective rate change stated |
A.2(i) |
Simplification |
01.05.2026 unless specified |
New monitoring lines |
Create lines for coated pipes, precursor chemicals, plant extracts, eco-friendly industries |
Lower visibility |
Better identification/monitoring |
A.2(ii) |
Improved data & enforcement |
01.05.2026 unless specified |
A10. Annexure – Customs Rules/Regulations (A.3)
| Topic | What announced | Before | After / New position | Ref | Key impact | Effective date |
| Baggage rules | New baggage rules issued | Old rules | New rules | A.3(i) | Modernises baggage framework | — |
| Deferred duty payment | Monthly deferral + new eligible importer class | Existing DPID Rules | Rules amended | A.3(ii) | Cashflow + ease | — |
| Courier exports cap | Remove courier export value cap | Cap existed | Cap removed | A.3(iii) | E-commerce exports | — |
| Returns/rejects | Relax returns/rejects; return-to-origin allowed | Stricter | Relaxed; return-to-origin | A.3(iv)-(v) | Decongestion + efficiency | — |
A11. Customs Duty Rate Changes (C.1 + C.2)
A11(a) Reductions (Effective 02.02.2026, unless specified)
| Item / Category | What announced | Before rate | New rate | Ref | Key impact | Effective date |
| Monazite | BCD reduced | 2.5% | Nil | C.1(1) | Lower input cost | 02.02.2026 |
| Sodium antimonate (solar glass) | BCD reduced | 7.5% | Nil | C.1(2) | Cheaper solar inputs | 02.02.2026 |
| Cap goods for Li-ion cells (BESS) | BCD reduced | As applicable | Nil | C.1(3) | Boost storage manufacturing | 02.02.2026 |
| Nuclear goods 8401 30 00 | BCD reduced | 7.5% | Nil | C.1(4) | Lower nuclear cost | 02.02.2026 |
| Absorber rods 8401 40 00 | BCD reduced | 7.5% | Nil | C.1(5) | Lower nuclear parts cost | 02.02.2026 |
| Project imports registered upto 30.09.2035 | BCD | As applicable | Nil | C.1(6) | Incentive till 2035 | 02.02.2026 |
| Microwave oven inputs | BCD reduced | As applicable | Nil | C.1(7) | Value addition | 02.02.2026 |
| Aircraft parts/components | BCD reduced | As applicable | Nil | C.1(8) | Manufacturing support | 02.02.2026 |
| Defence aircraft parts (MoD PSUs) | BCD reduced | As applicable | Nil | C.1(9) | Defence MRO | 02.02.2026 |
| 17 drugs/medicines | BCD reduced | 5% / 10% | Nil | C.1(10) | Patient relief | 02.02.2026 |
| 7 rare diseases | Duty exemption | As applicable | Nil | C.1(11) | Treatment relief | 02.02.2026 |
| Personal imports (9804) | Tariff | 10% / 20% | 10% | C.1(12) | Simplified tariff | 01.04.2026 |
A11(b) Increases/Modifications (Effective 02.02.2026)
| Item | What announced | Before rate | New rate | Ref | Key impact | Effective date |
| Potassium hydroxide | BCD increased | Nil | 7.5% | C.2(1) | Higher import cost | 02.02.2026 |
| Umbrellas (non-garden) | Duty floor introduced | 20% | 20% or ₹60/piece (higher) | C.2(2) | Anti-underinvoicing | 02.02.2026 |
| Umbrella parts | Duty floor | 10% | 10% or ₹25/kg (higher) | C.2(3) | Anti-evasion | 02.02.2026 |
A12. Exemptions Lapsed (C.3.1 + C.3.2)
A12(a) Lapse from 02.02.2026 (Notif 45/2025-Cus Table I)
| Item | Ref | Note |
| Animals and birds imported by Zoo | Table I Sl. 1 | — |
| Alpha pinene | Sl. 113 | — |
| Artificial plasma | Sl. 123 | — |
| Ammonium phosphate / ammonium nitro-phosphate (manure / complex fertilisers) | Sl. 128 | — |
| Potassium sulphate ≤52% K2O | Sl. 132 | No change in effective rate |
| Diagnostic/lab reagents 3822 90 90 | Sl. 137 | No change in effective rate |
| INVAR | Sl. 213 | — |
| Coffee roasting/brewing/vending machines (coffee) | Sl. 258 | — |
| Parts of radio trunking terminals | Sl. 285 | — |
| Educational CD-ROMs (books/journals/periodicals/newspapers) | Sl. 287 | — |
| Loco simulators | Sl. 310 | — |
A12(b) Lapse from 01.04.2026 (Notif 45/2025-Cus + Notif 113/2003-Cus)
| Item | Ref | Note |
| Naphtha for fertilisers | 45/2025 Table I Sl. 93 | — |
| LPG for polyisobutylene (SEZ↔DTA↔SEZ) | Sl. 95 | — |
| Silicon goods for solar wafers/cells | Sl. 107 | No change in effective rate |
| Maltol for deferiprone | Sl. 117 | — |
| Goods for Copper-T contraceptives | Sl. 145 | — |
| EPDM for insulated wires/cables | Sl. 154 | — |
| Non-woven fabrics for adult diapers | Sl. 172 | — |
| Spent catalyst/ash with precious metals | Sl. 201 | — |
| Metal parts for electrical insulators | Sl. 218 | — |
| Pipes/tubes for boilers | Sl. 219 | — |
| Permanent magnets for wind generators >500KW | Sl. 231 | — |
| Zeolite for catalytic converter wash coat | Sl. 236 | — |
| Web offset printing machines + mail room equipment | Sl. 243 | — |
| Cash / automatic banknote dispensers and parts | Sl. 271 | — |
| Film/TV equipment imported by foreign unit/team | Sl. 275 | — |
| Re-import of photographic/filming/sound equipment | Sl. 276 | — |
| Parts/components of digital still image video cameras | Sl. 291 | — |
| Raw materials/parts for e-Readers | Sl. 309 | — |
| X-Ray tubes for X-ray machine manufacture | Sl. 370 | — |
| Flat panel detector for X-Ray machine manufacture | Sl. 372 | — |
| Parts of video games for manufacture | Sl. 397 | — |
| Motion pictures/music/gaming software on media for consoles | Table IV Sl. 1 | — |
| Castor oil cake exemption (SEZ → DTA) | Notif 113/2003-Cus | — |
A13. Central Excise / NCCD (Para 11 + Annexure E)
| Topic | What announced | Before | After / New position | Para / Ref | Key impact | Effective date |
| Biogas blended CNG | Exclude biogas/CBG value (and GST on it) from transaction value for excise on blended CNG | Included | Excluded | Para 11 / E.1 | Prevents cascading valuation | — |
| NCCD on tobacco | NCCD rate increased but effective duty maintained via notification | 25% | 60% (rate), effective maintained at 25% | E.2 | Legal rate shift without effective burden change | 01.05.2026 |
A14. Others (Annexure F)
| Topic | What announced | Ref | Key impact |
| Other changes | “Few other changes” – details to be seen in Explanatory Memorandum and budget documents | F | Signals additional fine print beyond provided extract |
*****
For any query, or if you face any issue in Income Tax or GST—especially in cases involving legal proceedings, notices, litigation, or demand matters—please feel free to contact us at the details mentioned below:
- Mobile: +91-9818640458
- Email: varunmukeshgupta96@gmail.com
Kindly Refer to
Privacy Policy &
Complete Terms of Use and Disclaimer.
Author Bio
