Big relief to SEZ units: Center cuts customs duty, now selling in domestic market will be easy

Government SEZ Tariff Reduction Policy: The Central Board of Indirect Taxes and Customs has announced a big relief package for units in Special Economic Zones i.e. SEZ. Under this, concessional customs duty rates will now be applied on the sale of goods manufactured in the domestic tariff area. In line with the announcements of Budget 2026-27, this decision has been taken in view of the ongoing tensions and disruptions in global trade. An attempt has been made to address the concerns of manufacturing units through the Government SEZ Tariff Reduction Policy.

historical decision

The announcement made in the Union Budget is now being implemented through a new notification under Section 25 of the Customs Act 1962. This relief scheme will be effectively implemented for one year from April 1, 2026 to March 31, 2027. The main objective of the government is to ensure a level playing field for other units operating in the domestic market.

SEZ duty rates cut

Under this new scheme, the customs duty in different slabs has been reduced significantly so that the cost of production can be reduced. Goods which earlier attracted duty between 30 per cent and 40 per cent, will now be charged only 20 per cent customs duty. Similarly, the duty which was between 20 to 30 percent has now been reduced to 15 percent level.

small slab changes

The government has also made significant cuts in medium and small duty rates, due to which small industries will also be able to get direct benefits. Now the duty of 20 percent has been reduced to 12.5 percent and the duty of 12.5 and 15 percent has been reduced to 10 percent. Also, the duty of 10 percent has been reduced to 9 percent and that of 7.5 percent has been reduced to 6.5 percent.

Strict eligibility rules

To avail the benefit of this relief scheme, it will be very important for SEZ units to follow some mandatory conditions and strict rules. It is legally mandatory for the goods manufactured by these units to have at least 20 percent value addition as compared to the raw materials. This is expected to improve the quality and value of products in the manufacturing sector within the country.

Main focus on exports

Despite the relief, the main focus of the government is going to be on continuously increasing the exports made by SEZ units. Domestic sales at concessional rates cannot exceed 30 per cent of the highest annual FOB export value of the last three years. This limit has been placed so that the units never deviate from their main goal of earning foreign exchange.

transparent digital system

This entire scheme will be implemented completely through the automated system of the Central Board of Indirect Taxes and Customs. Bills of entry for clearance for the domestic market will be assessed through a faceless assessment system which will be highly transparent. This will eliminate the possibility of corruption and along with speeding up the work, human interference will also be minimized.

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goal of ease of doing business

Due to increasing tensions in the Middle East, global trade routes have been affected due to which Indian exporters have to face many challenges. With this new initiative of the Central Government, SEZ units will now get an opportunity to utilize their excess capacity in the domestic market. This step will prove to strengthen the Indian economy and provide a new energy to the manufacturing sector.