New Delhi, Feb 1 (.) Finance Minister Nirmala Sitharaman on Sunday announced a series of measures in the union Budget 2026-27 that are aimed at simplifying the customs and central excise regime.
While presenting the budget in Parliament, Sitharaman said the proposals seek to rationalize the tariff structure, correct duty inversions, and make trade processes more predictable and trust-based.
As part of measures to improve ease of living, the government proposed reducing the tariff rate on all dutiable goods imported for personal use from 20 percent to 10 percent.
In a major relief for patients, particularly those undergoing cancer treatment, the budget proposed exemption of basic customs duty on 17 drugs and medicines.
Additionally, seven more rare diseases have been included under the exemption framework for personal imports of drugs, medicines, and Food for Special Medical Purposes (FSMP) used in their treatment.
The Finance Minister also announced a revision of baggage clearance rules for international travelers to address long-standing concerns of passengers.
The revised provisions will enhance duty-free allowances and provide greater clarity on the temporary carriage of goods brought into or taken out of the country. Taxpayers will also be allowed to settle pending customs dues and close cases by paying an additional amount in lieu of penalties.
To ensure smoother and faster movement of goods, the budget outlined several reforms in customs processes with minimal official intervention.
Under the trust-based system, the duty deferral period for Tier 2 and Tier 3 Authorized Economic Operators (AEOs) will be extended from 15 days to 30 days. Eligible manufacturer-importers will also be granted the same facility, encouraging them to seek higher AEO accreditation.
The validity of advance rulings binding on Customs will be extended from three years to five years, providing greater certainty to trade. Regular importers with trusted supply chains will be recognized in the risk management system to minimize repeated cargo verification.
Export cargo using electronic sealing will be allowed factory-to-ship clearance, while trusted importers bringing in non-compliant goods will benefit from automated clearance upon arrival.
Sitharaman further announced that the customs warehousing framework will be transformed into a warehouse operator-centric system with self-declaration, electronic tracking, and risk-based audits.
“These reforms,” she said, “will reduce transaction delays, lower compliance costs, and move away from officer-dependent approvals.”
. DSV .