The government has signalled that it remains open to introducing a Customs amnesty scheme to address long‑pending disputes, even though no such proposal was included in the Union Budget for FY 2026-27 presented on February 1, 2026.
A senior finance ministry official said that while the administration recognises the importance of resolving legacy customs litigation, designing an effective and equitable amnesty framework has proven to be a complex task.
Why the Customs Amnesty Did Not Feature in the Budget
Industry bodies had strongly expected a one‑time Customs amnesty or voluntary disclosure scheme in the Budget, especially since the proposal featured prominently in pre‑Budget representations. Similar initiatives in the past, such as the Sabka Vishwas Legacy Dispute Resolution Scheme for indirect taxes and GST amnesty measures, had shown significant success in resolving disputes and unlocking stuck revenue.
Despite these expectations, the government chose not to announce a Customs amnesty in Budget for FY 2026-27. According to the official, this was not due to a lack of intent, but because the policy design did not reach a stage where it could be implemented effectively.
“We worked very hard on the amnesty scheme for Customs but somehow it was not getting worked out,” the official said, speaking on condition of anonymity.
Government Still Open to the Idea
The official made it clear that the idea of a Customs amnesty is not closed.
“If there are ideas, we are still open to take it into consideration. We would like to do it if we get a good plan and we have time,” he said.
This indicates that the government may consider introducing a scheme outside the Budget cycle, provided industry stakeholders come forward with a credible and workable proposal.
Amnesty Must Be Broad‑Based and Policy Driven
A key concern for the government is ensuring that any amnesty scheme is policy‑driven and not designed to favour a select group of beneficiaries.
“The government cannot give benefits to select entities. It has to be a policy,” the official said.
He added that industry should not approach the government as individual applicants seeking relief. Instead, trade bodies and associations should propose a comprehensive framework that clearly lays out eligibility conditions, safeguards, and expected outcomes.
Such an approach, the official indicated, would help maintain transparency, fairness, and legal robustness.
Scale of Pending Customs Disputes
Industry representatives argue that a Customs amnesty is urgently needed to deal with the mounting backlog of litigation.
According to industry estimates, more than 40,000 customs cases are pending as of 2024. These disputes involve demand amounts of close to $4.5 billion, much of which remains blocked due to ongoing legal proceedings.
A one‑time settlement scheme is seen as a way to resolve these cases efficiently, unlock working capital, and reduce the litigation burden on courts and tax authorities.
Revenue Impact of Securities Transaction Tax Changes
Commenting on revenue expectations following the increase in the securities transaction tax, the official said market volumes may soften but overall collections are expected to remain strong.
The government estimates that the STT hike will generate between Rs 15,000 crore and Rs 15,500 crore in additional revenue.
Why Tax Buoyancy Is Projected Lower in FY 2026-27
The Budget has projected a gross tax buoyancy of 0.8 for FY 2026-27, the lowest since the Covid‑19 pandemic period. Total tax collection for the year is estimated at Rs 44.04 lakh crore, representing an 8 percent increase over the revised estimates for FY 2025-26.
The senior official explained that the lower buoyancy projection is largely due to a one‑time base correction. FY 2026-27 will be the first full financial year in which all major tax changes announced in 2025 are fully reflected in the tax base.
Impact of GST Rate Restructuring
One of the main drivers of the base effect is the restructuring of GST rates. The government merged the earlier four GST slabs into two principal rates of 5 percent and 18 percent. Effective rates on white goods and consumer durables were reduced, and the GST compensation cess was discontinued.
Since only seven months of this new structure were reflected in FY 2025-26 data, the full impact will be visible in FY 2026-27. Once this base adjustment is absorbed, tax buoyancy is expected to improve in subsequent years.
Focus on Tax Certainty in the Budget
Beyond revenue projections, the official said the government’s broader focus in the Budget was on providing tax certainty and predictability.
Measures announced include clearly defined safe harbour provisions and specific tax treatments across sectors. Among the notable steps is a tax holiday extending until 2047 for foreign companies providing global cloud services through data centres located in India.
These measures are aimed at improving investor confidence, reducing disputes, and offering long‑term policy clarity.
What Lies Ahead
While a Customs amnesty scheme did not materialise in the FY 2026-27 Budget, the government’s stance suggests the proposal remains very much alive. The next step, however, rests with industry stakeholders to present a well‑thought‑out, inclusive, and administratively workable plan.
If such a framework emerges, the government has indicated its willingness to examine it, balancing the twin objectives of dispute resolution and fiscal prudence.
Source: Adapted from Financial Express