Simpler tax rules, quicker dispute resolution among key Budget demands

CII, Ficci, Assocham and PHDCCI have made common recommendations for Budget 2026-27, seeking predictable tax rules, rationalised TDS slabs, and faster resolution of pending appeals

With the Union Budget three months away, major industry chambers have submitted to the government proposals on common taxes, seeking simpler compliance and a quicker resolution of tax disputes.

 

The Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (Ficci), Associated Chambers of Commerce and Industry of India (Assocham), and PHD Chamber of Commerce and Industry (PHDCCI) have recommended statutory timelines for disposing of income-tax appeals and improvements to the faceless appeal system.

 

The chambers pointed to more than 540,000 appeals lying before the commissioner of income tax (appeals), involving disputed tax demands of over ₹18 trillion.

 

They said the delays locked up capital and affected business planning.

 

The measures suggested include prioritising high-value cases, permitting virtual hearing where needed, and sharing draft orders to allow the correction of factual errors.

 

A key recommendation is rationalising the structure of tax deducted at source (TDS). With over 35 TDS rates in place, industry bodies have proposed having two or three.

 

They sought exemption from TDS for transactions between entities that pay goods and services tax to ease the pressure of cash flow and compliance burden.

 

Beyond resolving the existing disputes, the industry bodies unanimously urged measures to prevent new ones from arising. A key proposal is to have statutory time limits for the Income Tax Department to provide essential clearances, such as the no-objection certificates (NOC) for corporate mergers and demergers.

 

The PHDCCI highlighted the point that a delay in receiving the NOC could delay restructuring for three-six months. Similarly, it advocated a time-bound process for the assessing officer to submit remand reports during appeals, a major cause for delay in the faceless appeal system.

 

Industry has also sought clarity on recent direct-tax amendments to the Income-tax Act, 1961, fearing these issues would persist in the 2025 law. Key concerns include the 2024 rule that treats share buybacks as dividend income without allowing shareholders to deduct their acquisition cost, and the long-standing ambiguity around carrying forward minimum alternate tax (MAT) credits during corporate mergers and demergers.

 

Ficci and the PHDCCI have recommended restoring the earlier definition of “associated enterprise” under the new Income-tax Act, 2025, to limit litigation.

 

On indirect taxes, the PHDCCI suggested easing input-tax credit restrictions under GST, and introducing a refund system for taxes paid before retrospective exemption notifications.

 

The CII has proposed digital “paper-free customs” by 2028 and a one-time settlement scheme for legacy customs disputes.

 

The CII has sought a charter on statutory rights of taxpayers to guarantee time-bound service, transparency, and accountability in tax administration.

 

According to CII Director General Chandrajit Banerjee, these proposals are not about cutting taxes but about cutting friction.

 

“By ensuring predictability, speed and respect for the taxpayer, the government can reinforce India’s position as a high-growth, rule-based economy and make tax policy a true driver of a Viksit Bharat 2047,” Banerjee said.