Industry seeks GST-style simplification in customs duty structure in Budget

New Delhi: India Inc is expecting a GST-style modification in the customs duty regime, as it seeks steps to promote trade facilitation and simplify dispute resolution in the FY27 Budget.

Besides rationalisation of Customs duty rates and pruning of slabs, the industry also wants a single-window clearance mechanism for export and imports, a definitive timeline for issuing Authorised Economic Operator (AEO) certification, and a charter for the intelligence agency DRI to conduct investigations.

On dispute resolution, the key ask of the industry is to digitise the entire process of litigation and a scheme to unclog Rs 1.52 lakh crore in customs duty locked in litigation.

Deloitte India Partner Gulzar Didwania said that currently, an importer or an exporter has to approach various government departments and ministries to get clearance for their shipments.

"That is becoming a big hindrance in doing trade. While I am ready to comply with all these things, but at least I should know that this is the department where I should go.

"Customs already has a provision under the Customs Act, which empowers them to act as a single window for all these import-export related licensing requirements. We want this facility to be launched as soon as possible, so that it actually achieves the real, true spirit of single window clearance," Didwania said.

Industry also wants the AEO scheme should have definitive timelines prescribed for getting certification. Importer/exporter/customs broker or such entities with AEO certification receive trade facilitation support from foreign customs administrations, thereby enhancing their global trade efficiency.

Also, like the government has issued guidelines for the functioning of DGGI under the GST law, industry is expecting some similar guidelines or charter for the Directorate of Revenue Intelligence (DRI), Didwania said.

EY India Tax Partner Saurabh Agarwal said that to realise the ambitious vision of a USD 5 trillion economy, the government must anchor its fiscal policy in tax certainty and the enhancement of manufacturing competitiveness. While the "Sabka Vishwas" and "Vivad se Vishwas" schemes successfully de-clogged the Central Excise and Service Tax and Income Tax dispute pipelines, the absence of a parallel framework for Customs remains an important policy announcement in our ease-of-doing-business agenda.

"To effectively arrest spiralling litigation, it is imperative to introduce a Customs Dispute Resolution Scheme covering cases pending up to the Tribunal level.

"Crucially, the architecture of this scheme must shift away from the "complete settlement of a pending litigation" approach to adopting an 'issue-wise' or 'year-wise' settlement mechanism. Such a pragmatic move would not only unlock stuck revenue but also foster a predictable tax environment essential for global investors," Agarwal said.

As of March 2024, 38,014 cases involving customs duty of Rs 1.52 lakh crore are locked in litigation.

KPMG, Partner and National Head, Indirect Tax, Abhishek Jain said in a year shaped by global uncertainty and ongoing tariff wars, the industry is looking at the Budget 2026 for greater certainty and stronger support for Make-in-India. Expectations include rationalisation of customs duties on key raw materials to make domestic manufacturing more competitive, simplification of duty slabs to reduce compliance friction and disputes and a one-time window to resolve legacy disputes and litigation.

Currently, customs duty has an 8-slab structure, and demands are to reduce it to 5-6 slabs.

"Faster closure of related-party valuation approvals for importers with maybe post-clearance risk-based audits instead of the current tedious process is seen as a practical step towards improving ease of doing business and supply-chain efficiency," Jain said.