The Central Board of Indirect Taxes and Customs Chairman Vivek Chaturvedi spoke to Kuldeep Singh on the proposals related to indirect taxes in Budget FY27. Edited Excerpts.
Q: The share of Goods and Services Tax (GST) in the overall budget receipts seems to drop (from 18% in FY26 to 15% for FY27)…
A: The GST rate rationalization is a factor behind slow growth. We have seen a growth of 3.5% in H1 FY27 over the H1 FY26 in GST. The projected growth for the second half is around 9.4% over the H2 FY26. There is tax buoyancy of 0.94X on 10% nominal GDP. The January collection data released on February 1 show positive trends in terms of absolute growth and taxable supplies, providing optimism despite rationalization effects.
Q: What is the rationale behind Budget proposals regarding basic customs duty?
It’s important to note the thought process behind the announcements. The government adopted a very carefully calibrated approach, focusing where customs duty benefits are truly needed.
Overall, the steps promote domestic manufacturing, provide protection where needed, build resilience and competitiveness against headwinds, and support exports. With upcoming trade deals and Free trade Agreements (FTAs), which are reciprocal in nature, the focus is on making domestic industry competitive by giving duty-free inputs rather than broad rationalisation. It’s a nuanced, sector-specific approach—not a wholesale overhaul.
Q: The tariff on dutiable goods imported for personal use was reduced from 20% to 10%. Does it cover e-commerce and courier imports?
A: Yes, you can order goods through e-commerce platforms or other channels for personal use only and get relief. Such transactions qualify as a personal import, so long as commercial quantities aren’t involved.
This corrects an anomaly by harmonizing gifts and personal imports at a single 10% rate. A total cumulative duty will be 30.98%, which includes basic custom duty at 10%, social welfare surcharge at 1% charge and Integrated Goods and Services Tax at 18%.
On US tariffs
Q: Are the US tariff a factor behind the move?
A: The approach was to make industry resilient and competitive to withstand headwinds (which include such factors). It wasn’t specifically linked to the US tariff, but the overall thought process of building competitiveness is reflected.
Q: On Special Economic Zone units being allowed to sell in domestic tariff area (DTA) with concessional duties..
A: SEZs are primarily meant for exports, but with export headwinds and idle capacity, allowing DTA sales helps utilize capacity. The framework ensures it doesn’t disturb the level playing field for DTA units (who invest similarly and sell domestically). Modalities, timelines, concessional duty structure, etc., are being finalized through stakeholder consultations (involving Commerce Ministry, etc.). It will apply to all units, but details are yet to be worked out.
On Customs revenue growth
Q: Customs revenue growth is set at 10% for FY26 but only 5% for FY27. Is this entirely due to these exemptions?
A: The conservative 5% for FY27 accounts for multiple factors: more trade deals/FTAs impacting tariffs and exemptions on capital goods to promote domestic manufacturing. Exemptions play a role, but trade deals and import patterns are more significant.
Q: Why was the Customs amnesty scheme not announced, as widely expected?
A: There is no amnesty scheme (under consideration) as such. However, we’ve addressed a key issue under Section 28 of the Customs Act. When a show cause notice is issued and adjudicated, duties, interest, fines, and penalties are imposed. The word “penalty” has a very negative connotation—especially for company directors with disclosure obligations—and often hinders smooth business even if duty and fine are accepted. We’ve amended the provision removing the negative connotation without it being a full amnesty. It specifically targets cases where penalty was the sticking point in litigation.
Customs system is dynamic and transaction-based so pin points, bottlenecks, and irritants will always be addressed agilely. This Budget introduced significant reforms, built on trust-based compliance. We have a robust plan with responsibilities, timelines, and review mechanisms. But customs will continue evolving; simplifications will happen based on trade feedback.
