In a significant move aimed at simplifying the complex landscape of import duties and exemptions, the Central Board of Indirect Taxes and Customs (CBIC) has rolled out a sweeping consolidation exercise. Effective from November 1, 2025, the Indian Customs duty structure, specifically concerning exemptions and concessional rates, will operate under a new, single, comprehensive notification, streamlining compliance for importers and trade professionals.
The CBIC issued a set of Frequently Asked Questions (FAQs)
on October 24, 2025, to clarify the scope and intent of these monumental
changes. This detailed analysis breaks down the key provisions, the rationale
behind the consolidation, and the minor substantive changes introduced.
1. The Mega-Merger: Notification No. 45/2025-Customs
The cornerstone of this simplification drive is the
introduction of Notification No. 45/2025-Customs. This is not merely a
replacement, but a strategic consolidation designed to make life easier for the
trade.
The Purpose: Trade Friendliness and Ease of Reference
Prior to this notification, customs duty exemptions and
concessional rates were scattered across numerous legal documents, most notably
the exhaustive Notification No. 50/2017-Customs, along with thirty
(30) other standalone customs notifications issued over many years (some
dating back to 1957).
The new Notification No. 45/2025-Customs has merged
all 31 notifications into a single, comprehensive document.
The clear motivation articulated by the CBIC is to promote "ease
of compliance." Instead of juggling references to dozens of distinct
notifications, importers and customs brokers can now rely on one document to
ascertain the applicable exemption or concessional duty rate, leading to
greater clarity and reducing the scope for errors.
2. Consequential Amendments: The Domino Effect
The consolidation of the core customs duty exemption
notification necessitated corresponding changes in other related tax
notifications to ensure seamless application. This was handled through Notification
No. 44/2025-Customs and a series of GST Rate Notifications.
A. Updating Cess References (Notification No.
44/2025-Customs)
This notification introduces consequential amendments
across several existing notifications that govern the calculation of various
Cesses, including:
ü Health Cess (Notification No.
8/2020-Customs)
ü Social Welfare Surcharge (SWS)
(Notification No. 11/2018-Customs)
ü Agriculture Infrastructure Development
Cess (AIDC) (Notification No. 11/2021-Customs)
The amendments simply substitute references to the old,
superseded notifications (like 50/2017-Customs) with the new entries found in Notification
No. 45/2025-Customs, ensuring the calculation of these additional levies
remains accurate post-merger.
B. Continuity of IGST Exemptions (Notification No.
18/2025-Rate Series)
To maintain the status quo regarding Integrated Goods and
Services Tax (IGST) exemptions on imports, the CBIC issued Notification
Nos. 18/2025 (for Central Tax, Union Territory Tax, and Integrated Tax).
These amendments update references related to the IGST
exemption previously linked to a specific list (List 34) in the old
Notification No. 50/2017-Customs. This action ensures that the IGST
exemption continues to be provided to specified banks and entities, linking
them now to the appropriate new entries (Lists 13, 14, and 15) in the
consolidated Notification No. 45/2025-Customs.
3. Substantive Changes: Two Minor Modifications
While the primary goal was consolidation without altering the
underlying duty structure, the CBIC introduced two minor substantive changes
following a review:
I. Exemption for Aircraft Maintenance Supplies (Air India)
The exemption originally provided to supplies for certain
Indian Air Force aircraft, previously linked to Air India International, has
been modified.
Ø Change: The exemption is now specifically
provided to supplies made by Air India Engineering Services Limited (M/s
AIESL).
Ø Scope Expansion: The updated entry now covers three
specific B-737 and two specific B-777 aircraft maintained and
operated by the Indian Air Force.
II. Removal of 5% BCD on Key Bulk Drugs (Poliomyelitis
Vaccine & Insulins)
A specific entry (S. No. 166A) in the erstwhile
Notification No. 50/2017-Customs, which prescribed a 5% Basic Customs Duty
(BCD) on bulk drugs used in the manufacture of Poliomyelitis Vaccine and
Monocomponent Insulins, has been removed.
Ø Rationale: The CBIC noted that a "Nil"
BCD rate was already available for the exact same bulk drugs under
another entry (erstwhile S. No. 167(D)).
Ø Result: By omitting the 5% entry, all imports
of these critical pharmaceutical bulk drugs will now uniformly attract the Nil
duty rate (which corresponds to S. No. 103(ii) in the new notification).
This resolves an ambiguity and ensures a lower effective duty rate for these
essential drugs.
4. Summary for the Trade
The issuance of these notifications marks a significant step
towards greater efficiency in India’s Customs administration.
|
Notification |
Key Action |
Effective Date |
|
45/2025-Customs |
Consolidates 31 previous Customs Notifications (including
50/2017-Customs) into a single document. |
Nov 1, 2025 |
|
44/2025-Customs |
Introduces consequential amendments to Health Cess,
SWS, and AIDC notifications. |
Nov 1, 2025 |
|
18/2025-Rate Series |
Introduces consequential amendments to maintain
existing IGST exemptions for specified entities. |
Nov 1, 2025 |
For businesses involved in importing goods, the primary task
is to transition from referencing dozens of old documents to relying solely on
the consolidated Notification No. 45/2025-Customs from November 1, 2025,
onward. The existing conditions and validity periods of most exemptions remain
unchanged, providing continuity alongside compliance simplification.
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