Section 25 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 25 is the source of customs duty exemptions. The Central Government can exempt goods from duty by a general notification, or case by case by a special order, and the section also fixes when notifications take effect, how long conditional exemptions last and the level below which no duty is collected.
This article follows the text on the CBIC portal updated to 30 March 2022 (the Act as amended up to the Finance Act, 2022). Please check any later Finance Act changes to this section before acting; exemptions are a field where later changes are common, so the text below is described as it stands in that copy and not as the law now.
The Central Government may exempt goods from the whole or part of duty in the public interest, generally by notification (absolutely or subject to conditions) or by special order in each case under circumstances of an exceptional nature. A conditional exemption under sub-section (1) is, unless otherwise specified, valid up to 31 March after two years from the date of grant or variation. No duty is collected if the duty leviable is equal to or less than one hundred rupees.
Sub-section (1): general exemption by notification
If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally, either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, goods of any specified description from the whole or any part of duty of customs leviable thereon.
Break it down: the trigger is satisfaction that it is necessary in the public interest; the instrument is a notification in the Official Gazette; the exemption is general, so it applies to goods of a description and not to one importer; it can be absolute or conditional; and the conditions may be of a kind to be fulfilled before or after clearance. The extent can be the whole of the duty or any part of it.
A condition "to be fulfilled after clearance" is what turns many exemptions into a compliance task: the benefit is taken at the time of import and the condition has to be met later. Our posts on IGCR rules for import at a concessional rate of duty and on project imports show how that works for end-use based concessions.
Sub-section (2): special order in an exceptional case
The Central Government may, if satisfied that it is necessary in the public interest so to do, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable. The footnote shows this sub-section was substituted by Act 32 of 2003 (section 107(a)) with effect from 14 May 2003.
Compare it with sub-section (1). The special order is made for each case, the circumstances must be of an exceptional nature, and they must be stated in the order. If a business believes its situation is exceptional, a legal consultation can help you decide whether to approach the Government and how to frame the circumstances.
Sub-section (2A): clarifying explanations
The Central Government may, if it considers it necessary or expedient for the purpose of clarifying the scope or applicability of any notification under sub-section (1) or order under sub-section (2), insert an explanation in that notification or order, by notification in the Official Gazette, at any time within one year of its issue, and every such explanation shall have effect as if it had always been part of the first such notification or order. So a clarification issued within one year relates back to the date of the original notification or order. The footnote records that this sub-section was inserted by Act 20 of 2002 (section 119(a)) with effect from 11 May 2002.
Sub-section (3): exemption by a different form of duty
An exemption under sub-section (1) or (2) from any part of the duty (the "statutory duty") may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable. Such an exemption has effect subject to the condition that the duty chargeable shall in no case exceed the statutory duty. The Explanation says "form or method", in relation to a rate of duty of customs, means the basis, namely valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable. In plain terms, the Government can replace a value-based rate with, say, a weight-based one, but the result can never be higher than the statutory duty.
Sub-section (4): when notifications take effect
Every notification issued under sub-section (1) or (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. The footnote shows this was substituted with effect from 14 May 2016 by section 119(i) of the Finance Act, 2016; sub-section (5) was omitted by the same Act and is not part of the live text.
Sub-section (4A): two-year validity of conditional exemptions
Where any exemption is granted subject to any condition under sub-section (1), the exemption shall, unless otherwise specified or varied or rescinded, be valid up to 31st day of March falling immediately after two years from the date of such grant or variation. The proviso says that for any such exemption in force on the date on which the Finance Bill, 2021 received the assent of the President, the period of two years is reckoned from 1 February 2021. The footnote shows that this sub-section was inserted with effect from 28 March 2021 by section 91 of the Finance Act, 2021 (13 of 2021).
Working an example of the arithmetic: suppose a conditional exemption is granted on 15 June 2030. Two years from that date is 15 June 2032, and the validity runs to the 31st of March that falls immediately after that date, which is 31 March 2033. The dates used here are invented; the rule applied is the one printed. Always check the notification, which may say otherwise.
Sub-section (6): the hundred rupee rule
Notwithstanding anything contained in the Act, no duty shall be collected if the amount of duty leviable is equal to, or less than, one hundred rupees. The footnote shows it was inserted by Act 32 of 2003 (section 107(b)) with effect from 14 May 2003. Note that it is a floor on collection: duty at or below one hundred rupees is not collected. The test is the amount of duty leviable, not the value of the goods. Section 27 also has a figure of one hundred rupees for refunds; see our article on section 27.
Sub-sections (7) and (8): mineral oils
Sub-section (7) deems mineral oils (including petroleum and natural gas) extracted or produced in the continental shelf of India or exclusive economic zone of India, as referred to in sections 6 and 7 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 (80 of 1976), and imported prior to 7 February 2002, to have always been exempted from the whole of the duties of customs, and bars suits and proceedings in respect of them. Sub-section (8) says that, notwithstanding the exemption in (7), no refund of duties of customs paid on those mineral oils shall be made. The footnote shows both were inserted by Act 25 of 2014 (section 81) with effect from 6 August 2014. This is a validating provision for a past period, so it matters mostly for historic matters.
The rules behind conditional exemptions
Where an exemption notification is subject to conditions on end use or concessional import, the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 apply; they say they are made under section 156 and supersede the 2017 Rules on concessional rate, and the copy consulted is dated 9 September 2022. That date is the date of the file, not of the Act text. The earlier Rules on the subject are the 2017 Rules. The rule-wise detail is not set out here.
A worked example with invented names
Arjun Industries Pvt. Ltd. imports machinery under a notification that exempts goods of that description subject to an end-use condition to be met after clearance. The exemption under sub-section (1) applies generally to that description of goods, and the condition has to be fulfilled after clearance. Whether the benefit is still available later depends on sub-section (4A) and the wording of the notification. Separately, a small consignment on which the duty leviable works out to a figure not above one hundred rupees attracts no collection of duty under sub-section (6). For other tools that give relief on imports, see our posts on the Advance Authorisation scheme, the EPCG scheme and the comparison of exemption and remission schemes, which rest on the exemption power.
Need help with an exemption claim?
A claim under an exemption notification depends on the exact wording of the notification and on meeting the conditions on time. Our legal consultation service can help you read the notification against your goods and plan the compliance steps.
Key takeaways
- The Central Government may exempt goods from the whole or part of duty in the public interest by notification (general) or special order (case by case).
- A notification can be absolute or conditional, with conditions to be fulfilled before or after clearance.
- An explanation inserted within one year of issue relates back to the original notification or order.
- A conditional exemption is, unless otherwise specified, valid up to 31 March after two years from grant or variation.
- No duty is collected if the amount leviable is equal to or less than one hundred rupees.
- The rates of exemption and the goods covered are in notifications, not in the Act.
Read next
- Section 12: dutiable goods and the charge of customs duty
- Sections 25A–25B: inward and outward processing of goods
- IGCR Rules: Import at Concessional Rate of Duty
- Duty Exemption vs Remission Schemes: Comparison
Disclaimer: Based on the Customs Act, 1962 as published on the CBIC Tax Information Portal, updated to 30 March 2022 (amended up to the Finance Act, 2022), as consulted on 2 October 2026. Finance Acts of 2023 and later, and the current rules, regulations and notifications, should be checked. This article is general information, not legal advice; check the official text before acting.