The Union Budget 2025-26 introduces significant customs duty reforms to enhance trade efficiency, encourage domestic manufacturing, and simplify tariff structures. Additionally, the Goods and Services Tax (GST) collection has surged, reflecting economic growth and improved compliance.
Customs Reforms in Budget 2025-26
Tariff Simplification:
Seven tariff rates have been eliminated to reduce complexities.
This rationalization is expected to ease customs procedures and reduce trade barriers.
Inverted Duty Structure Correction:
Custom duties have been adjusted to promote local production and prevent tax inefficiencies in imports.
Essential raw materials used in domestic manufacturing will have lower import duties.
Provisional Assessments Timeline:
A new sub-section sets a two-year limit for finalizing provisional assessments, with a one-year extension if justified.
This provides certainty to businesses regarding pending tax assessments.
Sector-Specific Duty Adjustments:
The government has restructured duties on automobiles, electronics, and textiles to encourage local value addition.
GST Collection Surge in FY 2025-26
Record GST Revenue:
January 2025 saw ₹1.95 lakh crore in GST collections, marking a 12.3% year-on-year growth.
This is a result of increased compliance, digital monitoring, and economic expansion.
Boost in GST Compliance:
Digital invoicing and stricter audits have helped reduce tax evasion, improving overall GST revenues.
Businesses adopting better tax reporting mechanisms have also contributed to this increase.
Growth in Formal Economy:
More businesses are registering under GST, broadening the tax base and improving transparency.
FAQs on Union Budget 2025-26 Customs & GST Reforms
- What are the major customs duty changes in Budget 2025-26?
The government has eliminated seven tariff rates, restructured import duties to promote domestic production, and introduced a two-year timeline for finalizing provisional assessments. - How does the new customs reform benefit businesses?
By simplifying the tariff structure and reducing import duty anomalies, businesses will experience lower compliance burdens and increased ease of trade. - Why has GST collection increased in FY 2025-26?
The rise in GST revenue is due to higher economic activity, stricter compliance measures, and the adoption of digital tax filing systems. - Will there be changes to GST rates for specific sectors?
While no major GST rate changes were announced, sector-wise adjustments might be introduced based on economic needs. - How do these reforms impact the common taxpayer?
The improved tax structure will enhance business growth, which may lead to lower prices on goods, better employment opportunities, and a more robust economy.
Conclusion
The Union Budget 2025-26 has introduced key customs duty reforms to simplify trade and support local industries, while the GST revenue surge indicates a growing and formalized economy. These changes are expected to reduce tax complexities, enhance compliance, and drive economic growth.
