How much tax will you pay on ₹2 lakh shopping during Europe, Dubai or other foreign trips in 2026?

The new baggage rules announced recently by the Ministry of Finance offer a duty-free allowance of ₹75,000 to an Indian resident, a tourist of Indian origin, or a foreigner with a valid visa, excluding infants.

However, there is considerable confusion about what is actually permitted under this allowance, and how much tax, or customs duty, one may have to pay on shopping during trips to Europe, Dubai, or any other place abroad. Read on for answers to these questions.

Customs duty is an indirect tax imposed by the government on incoming goods from abroad.

Baggage Rules 2026 have replaced the Baggage Rules 2016. The new rules align more with the needs of modern travelers. It is a complete revamp in terms of higher duty-free limits, allowance of one laptop in baggage, removal of the value-cap on jewellery, and higher transfer of residence limits.

However, the duty-free allowance of ₹75,000, as against ₹50,000 earlier, is a bit confusing in terms of what it applies to and what it does not apply to.

According to CA Siddharth Surana, the ₹75,000 duty-free allowance is only for the new merchandise purchased abroad. It applies to goods purchased during foreign trips and brought into India as part of one's baggage. It doesn't apply to foreign currency or to goods purchased from duty-free shops at airports.

"Firstly, this limit applies only to Indian nationals carrying baggage. It is important to mention that only new merchandise purchased from abroad and brought into India as bonafide baggage will be subject to the ₹75,000 limit," said Surana.

"The limit of ₹75,000 does not apply to foreign currency. Further, this would also not include any purchase from duty-free airport shops. The limit does apply to goods purchased from abroad and brought in as baggage in case of Indian residents," he added.

How much tax do you have to pay on ₹2 lakh shopping abroad?

Under the new rules, there is custom duty of 10% on most personal imported goods. The tax will apply if the value of the goods you are bringing from abroad is worth above ₹75,000. So, if you visit abroad and buy goods worth say ₹2 lakh, the customs duty will be calculated on only ₹1.25 lakh due to the ₹75,000 duty-free allowance. So, the tax will be 10% of ₹1.25 lakh, which is ₹12,500.

"Thus, if a passenger returns to India from destinations such as Europe and Dubai carrying new goods worth ₹2 lakh, the first ₹75,000 is exempt from customs duty. The remaining ₹1,25,000 becomes dutiable. Under the Budget 2026 changes, which are effective 1st April 2026, the general basic customs duty on most personal imported goods has been reduced from 20 % to 10 %, so items above your allowance will now attract about 10 % customs duty (plus any applicable cess/other charges)," said Surana.