CBIC Finance Bill 2026: Customs, Excise, GST Duty Updates

The Central Board of Indirect Taxes & Customs (CBIC) has released a comprehensive notification detailing significant changes in Customs, Central Excise, and Goods and Services Tax (GST) duties and regulations. These amendments follow the introduction of the Finance Bill, 2026, in the Lok Sabha on February 1, 2026. This crucial update affects various sectors, with revised duties and exemptions coming into effect on different dates, including February 2, 2026, April 1, 2026, and May 1, 2026.

Quick Overview

What Changed

The notification outlines extensive modifications across indirect tax regimes, summarized below:

Customs Duty Rate Changes

Numerous Basic Customs Duty (BCD) rates have been revised, with many existing exemption entries being incorporated into the First Schedule of the Customs Tariff Act, 1975. Key changes include:

• Increased Duties: For instance, BCD on Potassium hydroxide increased from Nil to 7.5% (w.e.f. Feb 2, 2026).
• Decreased Duties: BCD on Sodium antimonate for solar glass manufacture reduced from 7.5% to Nil (w.e.f. Feb 2, 2026). Fuel elements (cartridges) for nuclear power generation decreased from 7.5% to Nil (w.e.f. Feb 2, 2026).
• Exemptions Lapsed/Omitted: Nil BCD on Animals and birds imported by zoo omitted (attracting 30% BCD w.e.f. Feb 2, 2026). Concessional BCD on Alpha pinene (5%) omitted (attracting applicable BCD w.e.f. Feb 2, 2026). Exemptions on Naphtha, LPG, Copper-T contraceptives, Silicon for wafers/solar cells, Maltol for deferiprone manufacture, spent catalyst containing precious metals, Zeolite for catalytic converters, cash dispensers, television equipment, photographic equipment, Digital Still Image Video Camera parts, e-Reader raw materials, video game parts are set to lapse by March 31, 2026 or April 1, 2026.
• New Exemptions/Extensions: Duty-free import limit for specific goods used in seafood processing for export increased from 1% to 3% of FOB value and extended till March 31, 2028. BCD exemption extended to 17 new drugs/medicines (e.g., Ribociclib, Abemaciclib) and for drugs/medicines for 7 rare diseases (w.e.f. Feb 2, 2026). BCD exemption on capital goods for Lithium-Ion Cells extended to batteries of Battery Energy Storage Systems (BESS). Raw materials/parts for aircraft manufacturing also exempted.
• Revised Rates: BCD on umbrellas revised to “20% or Rs. 60 per piece, whichever is higher” (w.e.f. Feb 2, 2026). Tariff rate for dutiable goods imported for personal use reduced from 20% to 10% (w.e.f. April 1, 2026).

Review of Customs Duty Exemptions (Annexure II)

A comprehensive review of conditional and unconditional exemptions has been undertaken:

• 102 exemptions/concessional rates are extended up to March 31, 2028.
• 22 exemptions/concessional rates are scheduled to lapse by March 31, 2026.
• 14 unconditional exemptions (including 5 redundant entries) are omitted w.e.f. February 2, 2026.
• Sunset clauses have been removed from 3 and prescribed for 4 conditional exemption entries.
• 22 redundant exemption entries from notification No. 36/2024-Customs are omitted w.e.f. February 2, 2026.

Simplification of Tariff Structure (Tarrifisation – Annexure III)

New tariff lines have been created in the First Schedule to streamline effective rates. For example, new tariff rates will apply from May 1, 2026, for:

• Meat and edible offal of turkeys, frozen: 5%
• Pecan Nuts: 30%
• Artificial Graphite: 2.5%
• Polymers of vinyl chloride: 7.5%
• Ferro-nickel: Nil

Amendments to Customs Act, 1962 (Annexure IV)

Legislative changes will come into effect from the date of enactment of the Finance Bill, 2026:

• Jurisdiction of the Customs Act, 1962, extended beyond territorial waters for fishing and related activities.
• A new clause defines ‘Indian-flagged fishing vessel’.
• Advance ruling validity remains for five years or until a change in law/facts.
• New section 56A provides special provisions for fishing activities beyond territorial waters, including duty-free import of harvested fish.
• Section 67 amended to remove the requirement of prior permission for removing warehoused goods from one customs bonded warehouse to another.

Changes in Customs Rules and Regulations (Annexure IV)

• Deferred duty payment is now monthly, and a new class of ‘eligible importers’ is created (w.e.f. date of enactment of Finance Bill, 2026).
• Baggage Rules, 2016 superseded by Baggage Rules, 2026 to rationalize provisions, clarify temporary carriage of goods, and restructure Transfer of Residence benefits (w.e.f. midnight of Feb 2, 2026).
• Existing Baggage Declaration Regulations and other related regulations are superseded by the Customs Baggage (Declaration and Processing) Regulations, 2026 for a consolidated framework.

Central Excise Changes

• National Calamity Contingent Duty (NCCD) on chewing tobacco, jarda scented tobacco, and other tobacco products revised (effective rate remains 25% w.e.f. May 1, 2026).
• Central excise duty on CNG compressed with biogas/CBG will exclude the value of biogas/CBG from the blended CNG for computation (w.e.f. Feb 2, 2026).
• Additional excise duty of Rs 2 per litre on unblended Diesel deferred till March 31, 2028.

Goods and Service Tax (GST) Amendments

These changes will come into effect from April 1, 2026, unless otherwise specified:

• CGST Act amended to delink post-sale discount from agreement requirement.
• Provisional refund provisions extended to refunds arising from inverted duty structure.
• Threshold limit for sanction of refund claims for goods exported with tax removed.
• Government may empower an existing Authority as the National Appellate Authority for Advance Rulings.
• IGST Act amended regarding the place of supply for “intermediary services”.

Reason for Change

These comprehensive changes are introduced through the Finance Bill, 2026, as part of the government’s ongoing efforts to rationalize duty structures, simplify compliance, provide clarity in regulations, and promote specific economic activities such as manufacturing and exports. The review of exemptions aims to streamline the tax regime and ensure that concessions are aligned with current policy objectives.

Action Required for Stakeholders

Given the wide-ranging nature of these changes, businesses, importers, exporters, and tax professionals are strongly advised to:

• Review Detailed Notifications: Thoroughly study the specific notifications and circulars mentioned in the official document to understand the precise implications for their operations.
• Consult Tax Advisors: Seek expert advice from tax consultants or legal professionals to ensure full compliance and proper implementation of the revised duties and regulations.
• Update Systems: Make necessary adjustments to their accounting, invoicing, and inventory management systems to reflect the new duty rates and procedural changes.
• Monitor Official Channels: Regularly check the official CBIC (www.cbic.gov.in) and India Budget (www.indiabudget.gov.in) websites for any further clarifications or new releases.

Frequently Asked Questions

Q1: What is the primary purpose of these changes?

A1: The primary purpose is to implement the proposals made in the Finance Bill, 2026, to rationalize customs duty structures, central excise, and GST, simplify procedures, and support economic objectives like domestic manufacturing and exports.

Q2: Where can I find the complete list of notifications and circulars?

A2: The complete list of notifications and circulars, along with the Finance Bill, 2026, and the Finance Minister’s Budget Speech, can be downloaded from www.indiabudget.gov.in and www.cbic.gov.in.

Q3: Do these changes affect all goods and services?

A3: No, the changes are specific to various goods and services as detailed in the notification, organized by chapters of the Customs Tariff Act, and specific provisions for Central Excise and GST. Businesses should check relevant sections applicable to their products.

Q4: What are the key effective dates for these changes?

A4: Changes come into effect on various dates, including February 2, 2026, April 1, 2026, May 1, 2026, and the date of enactment/assent of the Finance Bill, 2026.

Q5: How do the new Baggage Rules, 2026, impact international travelers?

A5: The new Baggage Rules, 2026, supersede the 2016 rules to rationalize provisions, address passenger concerns at airports, clarify temporary carriage of goods, and restructure Transfer of Residence benefits for Indian residents and foreign professionals, effective from midnight of February 2, 2026.

Q6: Are there any changes to GST for businesses?

A6: Yes, the CGST Act is amended regarding post-sale discounts and provisional refunds, and the IGST Act is amended concerning the place of supply for “intermediary services.” These changes aim to make the mechanism for dispute resolution robust and offer greater certainty to taxpayers, with some effective from April 1, 2026.

Q7: What should I do if my business is impacted by these duty changes?

A7: It is crucial to thoroughly review the official notification, consult with a tax expert, and update your internal systems and processes to ensure compliance with the new duty rates and regulations. Regular monitoring of CBIC’s official website for further guidance is also recommended.

Q8: Will there be any further clarifications on these changes?

A8: The notification encourages stakeholders to provide urgent feedback and seek clarification on any issues. It is common for CBIC to issue further circulars or FAQs to clarify complex provisions following major budget announcements.