Union Budget 2026: Finance Minister Nirmala Sitharaman reduces customs duties; importing goods will become cheaper

New Delhi: Importing goods from abroad will now be cheaper. The government has reduced customs duty. This was announced by Finance Minister Nirmala Sitharaman while presenting the Union Budget 2026. She proposed reducing the customs duty on all imported goods from 20% to 10%. This means that importing goods from abroad will now be more affordable. The government aims to simplify the customs duty system.

Understanding how customs duty is levied can be a bit complicated. The Economic Times, based on information from the DHL website, explains that imported goods are subject to Basic Customs Duty (BCD). This duty depends on the type of goods. In addition, Integrated Goods and Services Tax (IGST) is also levied on the value of the goods and their HSN code (Harmonized System code). In India, goods are identified by an 8-digit HSN code based on their characteristics.

How is customs duty calculated?

Let's understand this using the method provided on the DHL website. First, the 'assessable value' is determined. This is calculated by combining the cost of the goods, insurance, and freight (CIF).

To prove this value, you must have all the necessary documents such as invoices and shipping bills.

After this, the Basic Customs Duty (BCD) is applied based on the HSN code.

Let's understand this in simpler terms:

Suppose you import an air conditioner worth Rs. 40,000 from abroad. The HSN code for the air conditioner is 84151020. According to the old rates, the calculation would be as follows:

Basic Customs Duty (BCD): 20% of ₹40,000 = ₹8,000

Integrated Goods and Services Tax (IGST): 28% of (₹40,000 + ₹8,000) = ₹13,440

Social Welfare Surcharge: 10% of (₹40,000 + ₹8,000 + ₹13,440) = ₹6,144

Total Duty and Taxes: ₹8,000 + ₹13,440 + ₹6,144 = ₹27,584

Thus, the total customs duty and taxes on this air conditioner amounted to ₹27,584.

Now, let's look at the calculation according to the new proposed rates:

Proposed Basic Customs Duty (BCD): 10% of ₹40,000 = ₹4,000

Integrated Goods and Services Tax (IGST): 28% of (₹40,000 + ₹4,000) = ₹12,320

Social Welfare Surcharge: 10% of (₹40,000 + ₹4,000 + ₹12,320) = ₹5,632

Total Duty and Taxes: ₹4,000 + ₹12,320 + ₹5,632 = ₹21,952

Therefore, according to the new rates, the total customs duty and taxes will be ₹21,952.

How much will you be able to save?

In this example, due to the reduction in customs duty on personal goods from 20% to 10%, there will be a saving of ₹27,584 - ₹21,952, i.e., ₹5,632. This will make importing goods from abroad cheaper for people. Note that this customs duty will not apply to gold and silver.