Budget 2025 Proposes New Time Limit for Refund Claims under Customs Act
Finance Bill 2025 clarifies customs refund claims, A one-year time limit is set for refunds due to revised entries under Section 18A and amendments under Section 149
Finance Minister Nirmala Sitharaman presented the Union Budget for the Financial Year 2025-26 in the Lok Sabha, followed by the release of the Finance Bill 2025. Among the significant amendments proposed, a new Explanation has been inserted in Section 27(1) of the Customs Act, 1962, to clarify the time limit for refund claims. Under the proposed change, the period of limitation for...
Finance Minister Nirmala Sitharaman presented the Union Budget for the Financial Year 2025-26 in the Lok Sabha, followed by the release of the Finance Bill 2025. Among the significant amendments proposed, a new Explanation has been inserted in Section 27(1) of the Customs Act, 1962, to clarify the time limit for refund claims.
Under the proposed change, the period of limitation for refund claims arising from a revised entry under Section 18A or an amendment under Section 149 of the Act will now be one year from the date of payment of duty or interest. This amendment aims to streamline refund procedures and provide greater clarity to importers and businesses dealing with customs duties.
Important Changes
- Defined Refund Period: The amendment establishes a clear one-year timeframe for refund claims, eliminating ambiguity in cases involving revised or amended entries.
- Improved Compliance: Businesses will now have a concrete deadline to submit their refund applications, reducing delays and disputes.
- Efficient Customs Processes: By setting a strict refund window, customs authorities expect to enhance processing efficiency and minimize pending claims.
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Updated Section 27 of the Customs Act:
[27. Claim for refund of duty.]
(1) Any person claiming refund of any duty or interest, —
(a) paid by him; or
(b) borne by him,
may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year from the date of payment of such duty or interest:
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Provided that where an application for refund has been made before the date on which the Finance Bill, 2011 receives the assent of the President, such application shall be deemed to have been made under sub-section (1), as it stood before the date on which the Finance Bill, 2011 receives the assent of the President.
Explanation: (New Proposal 2025) For the removal of doubts, it is hereby clarified that the period of limitation of one year shall also apply to a refund claim consequent to—
(i) a revised entry under Section 18A (New Proposal 2025); or
(ii) an amendment under Section 149 (New Proposal 2025).
Read More: Union Budget 2025: Key Highlights
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