Govt Slashes Basic Customs Duty on Crude Edible Oils from 20% to 10%
In a significant policy step aimed at cooling inflation and supporting the domestic supply chain, the Government of India has reduced the Basic Customs Duty (BCD) on crude edible oils from 20% to 10% with immediate effect.
This move directly impacts importers, edible oil processors, and downstream businesses like FMCG and food industries, while indirectly helping consumers by easing retail inflation in the near term.
Key Highlights: Basic Customs Duty on Edible Oils
| Particulars | Earlier Rate | New Rate (2025) |
|---|---|---|
| Crude Palm Oil (CPO) | 20% | 10% |
| Crude Soybean Oil | 20% | 10% |
| Crude Sunflower Oil | 20% | 10% |
| Notification No. | [To be updated with official CBIC source] | |
| Effective From | Immediate (June 2025) |
Why Was the Duty Cut on Crude Edible Oils?
- Curb Food Inflation: Edible oils are a major component in India’s CPI basket. Duty reduction helps lower end prices.
- Balance Domestic Supply: To bridge gaps in local production amid global uncertainties.
- Policy Continuity: Extends the government’s earlier stance of keeping edible oil duties lower for consumer relief.
Impact on Businesses and Importers
✅ Lower Import Cost → Direct benefit for importers, saving approx. ₹10–15 per litre.
✅ Better Margins for Processors → Especially for refineries using crude oils.
✅ GST Payable → Remains unchanged. IGST still applies on import value + BCD.
✅ Reduced Working Capital Lock-in → Less customs duty means reduced upfront cash blockage.
Legal and Tax Compliance Angle
- CBIC Notification: The rate cut will be formalised through an amendment under the Customs Tariff Act, 1975, via CBIC notification (awaited at the time of writing).
- GST Implication: Import of crude edible oils attracts IGST at 5% or 12%, depending on the classification.
- No Change in Social Welfare Surcharge (SWS): Still calculated at 10% of BCD (i.e., now lower due to 10% base).
Expert Insight: What Should Importers Do Now?
“Importers should rework their landed cost calculations and ensure quick customs clearance to benefit from the new 10% BCD. Businesses with bulk contracts may want to renegotiate pricing immediately.”
— CA Ankit Mehta, Indirect Tax Expert, Efiletax Network
Action Steps for Taxpayers and Importers
- ✅ Check latest CBIC notifications or updates on cbic.gov.in
- ✅ Update customs clearance documentation
- ✅ Recalculate IGST payable using new BCD
- ✅ Inform suppliers or revise LC terms (if applicable)
- ✅ Track landed cost impact in accounting books for FY 2025–26
FAQ: BCD on Crude Edible Oils
Q1. Is this change permanent?
→ The duty cut is notified but can be revised anytime depending on inflation and supply concerns.
Q2. Will GST on edible oils reduce too?
→ No. GST is levied on the transaction value and remains unchanged.
Q3. Does this apply to refined edible oils?
→ No. This cut is only for crude edible oils, not refined versions.
Summary
The Government of India has cut Basic Customs Duty on major crude edible oils from 20% to 10%. This move aims to reduce inflation and support supply chains, benefiting importers and edible oil processors across the country.