Budget 2026:
Rs 1.52 lakh crore locked in Customs disputes; Govt may consider amnesty, duty slab rationalisation
Jan 8, 2026
With more than Rs 1.52 lakh crore of customs duty locked in litigation, the government may consider introducing an amnesty scheme in the Union Budget for 2026–27 to bring closure to long-pending disputes and provide certainty to businesses, Price Waterhouse & Co LLP said on Thursday, PTI reported.
The government could also look at further rationalising customs duty rates by reducing the number of slabs to five or six from the current eight, as part of efforts to address the inverted duty structure arising from India’s expanding network of free trade agreements (FTAs), said Gautam Khattar, Principal, Price Waterhouse & Co LLP.
“Today, in Customs, we have 8 slabs; the idea is to reduce it to 5–6 slabs with rate rationalisation. Within rate rationalisation, another area which should be looked at is the inverted duty structure vis-a-vis FTAs,” Khattar told PTI.
He noted that free trade pacts have made several finished goods cheaper than the raw materials used to manufacture them domestically, creating duty inversion issues. “So it will be apt to look at this duty inversion and consider raw material duty rate reduction vis-a-vis the finished products,” Khattar said.
India has signed FTAs with countries such as New Zealand, the UK and Oman, while negotiations are ongoing with the EU and the US. In the Union Budget for 2025–26, the government had already rationalised the customs duty framework by bringing down the number of Basic Customs Duty (BCD) slabs to eight, including a zero-rate slab.
On litigation, Khattar said industry has been pushing for an amnesty scheme to resolve legacy disputes. “Expectation is to provide certainty so that historic disputes are closed,” he said.
As of March 2024, around 38,014 cases involving customs duty of Rs 1.52 lakh crore remain under litigation, PTI reported.
Apart from dispute resolution and rate rationalisation, faster customs clearances and improved trade facilitation are also expected from Budget 2026–27, Khattar added.
[The Times of India]
