Modest Projections: Navigating Customs and GST Growth Amid Free Trade Challenges

The Indian government has set a 5% growth target for customs revenue for FY2026-27, considering factors like free trade agreements and duty exemptions on capital goods. GST revenue is expected to grow by 6.3%, despite rate cuts on numerous items, with overall revenue targets deemed achievable.

The government has announced a modest growth target of 5% for customs revenue in FY2026-27, reflecting the anticipated impacts of free trade agreements, duty exemptions on capital goods, and a decrease in edible oil imports, according to a top official.

Central Board of Indirect Taxes and Customs (CBIC) Chairman, Vivek Chaturvedi, noted in an interview with PTI that GST revenues are projected to increase by 6.3% in FY27, despite tax rate reductions on approximately 375 items. The revenue targets for FY27 are considered realistic and achievable.

The revenue projection is underpinned by cautious economic assumptions, including the preference for Most Favored Nation (MFN) rates due to more FTAs, and customs duty exemptions on capital goods imports announced in the FY27 Budget.

(With inputs from agencies.)