Budget 2026: Govt may reduce number of customs duty slabs

The Centre is reportedly considering reducing the number of customs duty slabs to five or six as part of efforts to streamline the customs framework. This follows major rationalisation in the previous budget cycle and aims to simplify the tariff structure, reduce disputes, and align duties with national priorities.

According to a report in The Economic Times that quoted a senior official, there is scope for further rationalisation despite the changes made in the last budget. These efforts have been ongoing for several months, with an announcement expected in the 2026 budget.

The Central Board of Indirect Taxes and Customs (CBIC) is leading the changes, focusing on aligning customs duties with the revised Goods and Services Tax (GST) system. This is intended to create a more unified indirect tax regime and ease compliance for businesses operating under both customs and GST, the report added.

Officials have highlighted the need to address issues raised by businesses and are working to resolve persistent problems in the current customs structure. The government is also looking at redefining the duty structure between Special Economic Zones (SEZs) and Domestic Tariff Areas (DTAs) as part of broader SEZ reforms, the report stated.

Reducing classification disputes, which contribute to litigation, is a key focus. Over 75,000 customs cases were pending as of December 2024, with arrears of Rs 24,016.20 crore. Industry groups have called for an amnesty scheme in cases without wilful evasion to lower litigation.

Finance Minister Nirmala Sitharaman has stated that simplifying the customs duty framework remains a priority in the government’s reform agenda.