Consolidation of Customs Duty Exemptions

The Ministry of Finance (Department of Revenue) issued Notification No. 45/2025-Customs under Section 25(1) of the Customs Act, 1962 and Section 3(12) of the Customs Tariff Act, 1975. This comprehensive notification supersedes over 30 previous customs notifications issued between 1957 and 2025 to consolidate and rationalize customs duty exemption.

The notification serves multiple policy objectives. It simplifies the customs framework by replacing 30+ scattered notifications with a single, unified structure, reducing administrative complexity and duplication. It rationalizes exemptions to align them with current industrial and trade priorities, removing outdated concessions. The inclusion of sunset clauses ensures periodic review of tax benefits, strengthening fiscal discipline. By harmonizing conditions and rate structures, it promotes ease of compliance and transparency. Most importantly, it aligns India’s customs policy with national priorities such as Make in India, Digital India, the National Green Hydrogen Mission, Electronics and Semiconductor Manufacturing, and the Renewable Energy Goals, thereby creating a more coherent, forward-looking, and business-friendly trade environment.

Supersession of Earlier Notifications

The notification explicitly supersedes a long list of previous exemption notifications, from No. 3/1957–Customs up to No. 1/2025–Customs, including several major ones like:

No. 50/2017–Customs (the central omnibus exemption notification used for decades),
No. 86/2017, 57/2022, and 1/2025–Customs, among others.

This means that all earlier standalone or sector-specific exemption notifications now stand withdrawn or merged into this unified framework. The new notification consists of four main tables (Table I–IV), each listing categories of goods, their applicable duty rates, and conditions under which exemptions apply.

Scope and Coverage of Exemptions

1. Table I – General Goods and Sectoral Exemptions

Covers a wide range of goods and sectors, including:

Agriculture and Animal Husbandry: Live animals, seeds, feed materials, planting inputs, fertilizers, fish feed, and aquaculture items with concessional or nil duty (mostly 5% or Nil).
Food and Agro-Processing: Imports of edible oils, nuts, pulses, and food additives at reduced duty rates; some with expiry clauses up to March 2026.
Pharmaceuticals and Healthcare:
- Lifesaving drugs and bulk drugs (Nil or 5% duty).
- Diagnostic kits and medical equipment.
- Inputs for rare-disease treatments and patient assistance programs.
- Exemptions extended till March 31, 2029 for critical items.
Renewable Energy and Green Technologies: Solar, wind, and semiconductor components (e.g., EVA sheets, silicon wafers, photovoltaic cells, FRP rods, etc.) with Nil duty to support Atmanirbhar Bharat in renewables and electronics. Sunset clauses mostly till March 31, 2026 or 2027.
Telecom and Electronics Manufacturing: Inputs for telecom-grade optical fiber cables, semiconductor wafer fabrication, and chip assembly units, exempt from basic customs duty.
Export Promotion Items: Accessories, trims, and consumables used in manufacturing garments, footwear, handicrafts, and leather goods for export, imported by bona fide exporters at Nil duty.
Energy and Infrastructure: Petroleum crude and specified fuels, electrical energy supplied from SEZs, and inputs for fertilizers continue at concessional rates. Specific reliefs for offshore exploration, metallurgical and petroleum operations, and power generation (including SEZ-based power).

2. Table II – Conditional/Specific Sector Exemptions

Focuses on sectors with special end-use requirements, such as:

Defense and aerospace materials
Research and development equipment
Inputs for nuclear, space, or strategic projects

Each entry is tied to end-use certification conditions outlined in the annexure.

3. Table III – Goods also covered under IGST and Cess Exemptions

Includes categories eligible for simultaneous relief from:

Basic Customs Duty (BCD)
Integrated GST
Compensation Cess

4. Table IV – Special Valuation Rule for Data Media

Applies to imports of software, data, or similar goods on physical media.

The duty is calculated only on the cost of the carrier medium, excluding the value of the software/data content, a continuation of the long-standing IT import valuation principle.

Each table references specific annexures listing conditions for availing exemptions, such as:

Actual-user condition (imports must be for self-use in manufacturing).
End-use certification (e.g., issued by DGFT, DPIIT, or relevant line ministry).
Time-bound use clauses (validity till 31 March 2026/2027/2029).
Export obligation clauses for exporters.

The notification will come into force on the November 1st, 2025.

We thank the GST Council for accepting many of its recommendations at the 53rd GST Council Meeting in New Delhi

The US-India Tax Forum, a dedicated tax policy forum of USISPF, extends its gratitude to the GST Council for accepting many of our recommendations at the recently held 53rd GST Council Meeting in New Delhi.We also thank Deloitte India Mahesh Jaising for their support in taking forward critical issues with the Ministry of Finance.The recommendations of US-India Tax Forum aimed to address significant ease of doing business challenges and promote investments and economic opportunities in India.We remain committed to building on this momentum, addressing areas for reform in GST 2.0 and advocating for better tax policies to improve the ease of doing business environment.