Emphasising predictability and ease of doing business, Union Finance Minister Nirmala Sitharaman on Saturday announced a key reform in customs administration as part of the Union Budget 2026-27, proposing to extend the validity period of advance rulings binding on Customs from the current three years to five years.
Presenting the Budget in the Lok Sabha, the Finance Minister said the move is aimed at providing greater certainty to businesses and enabling better long-term planning, particularly for entities engaged in international trade and large-scale imports.
What Are Advance Rulings
Advance rulings under the Customs Act allow importers and exporters to seek clarity in advance on issues such as classification of goods, applicability of exemptions, valuation, and duty liability. These rulings are binding on Customs authorities and the applicant, helping businesses avoid disputes and litigation after goods are imported or exported.
Until now, such rulings were valid for a period of three years, or until there was a change in law or facts. The proposed extension to five years marks a significant policy shift towards regulatory stability.
Boost to Business Planning and Compliance
By extending the validity period, the government aims to reduce uncertainty faced by businesses operating under long-term contracts and capital-intensive supply chains. The measure is expected to particularly benefit manufacturing, electronics, pharmaceuticals, engineering goods, and infrastructure sectors, where import decisions are often taken with a multi-year horizon.
The longer validity will also reduce the need for frequent re-applications and administrative engagement with customs authorities, thereby lowering compliance costs and improving operational efficiency.
Alignment With Ease of Doing Business Agenda
The proposal forms part of the government’s broader effort to create a trust-based, facilitative customs regime. Over the past few years, the Centre has focused on simplifying procedures, reducing litigation, and improving transparency in tax and customs administration.
Extending the validity of advance rulings is expected to strengthen India’s position as a predictable and investor-friendly trade destination, while also helping authorities focus on risk-based enforcement rather than routine disputes.
Legal Framework and Implementation
The change will be carried out through amendments proposed in the Finance Bill, 2026. As with existing provisions, the extended validity will remain subject to there being no change in law or material facts on which the ruling was based.
Once enacted, the reform is expected to bring Indian customs practice closer to global best standards, where certainty and advance clarity are considered key pillars of trade facilitation.
