Pre-Budget meeting: Ficci seeks faster resolution of tax disputes

Industry body calls for clearing ₹18 trillion in pending tax appeals, TDS rationalisation and tax neutrality for fast-track demergers ahead of Union Budget 2026

The Federation of Indian Chambers of Commerce and Industry (Ficci) has sought urgent steps to clear the huge backlog of income-tax appeals, simplify tax deducted at source (TDS) compliance, and ensure tax neutrality for fast-track demergers, during its consultation with Revenue Secretary Arvind Shrivastava ahead of the Union Budget 2026-27.

 

Ficci told the finance ministry that nearly 5.4 lakh appeals involving ₹18.16 trillion are pending before Commissioners of Income Tax (Appeals) [CIT(A)], a situation that undermines the intent of the faceless appeals mechanism introduced in 2021. The chamber urged the government to set time-bound disposal targets, fill 40 per cent vacancies at the CIT(A) level, and adopt a dual-track system to fast-track simple or low-value cases while allowing detailed scrutiny for complex ones. It also suggested automatic approval of virtual hearings within two weeks and refund or stay of demand where appeals remain pending for over two years without taxpayer fault.

 

 

To ease working capital pressure, Ficci recommended rationalising the stay of demand rules. It pointed out that despite the Central Board of Directors Taxes’ (CBDT’s) circular capping the pre-deposit at 20 per cent, refunds are often adjusted by the Central Processing Centre (CPC) even against stayed demands. The chamber proposed real-time integration between assessing officers and the CPC to prevent such mismatches, and allowing taxpayers to provide bank guarantees or indemnities in lieu of cash deposits.

 

The industry body also pressed for tax neutrality for fast-track demergers under Section 233 of the Companies Act, 2013, arguing that denying such treatment defeats the government’s ease of doing business objectives and clogs the National Company Law Tribunal (NCLT) with small intra-group cases. "... The government should reconsider its views and include reference to Section 233 of the Companies Act 2013 in Section 2(35) of the Income-Tax Act (ITA) 2025 to provide tax neutrality to fast-track demergers," Ficci said in its recommendation.

 

On TDS, Ficci said the current structure — with 37 separate provisions ranging from 0.1 per cent to 30 per cent — adds unnecessary compliance burden. It proposed reducing them to three broad rate slabs and exempting B2B (Business-to-Business) payments already covered under goods and services tax (GST).

 

Among other key recommendations, Ficci urged the government to clarify that foreign original equipment manufacturers (OEMs) storing components in India for just-in-time manufacturing should not be treated as having a business connection as many foreign OEMs remain hesitant to deploy their most-advanced machinery and technology in India. It also requested to restore the existing transfer pricing definition of “Associated Enterprise” in the new ITA 2025 to avoid fresh litigations.

 

On the Customs side, it sought additional Customs Authority for Advance Rulings offices in the South and East of India, and a centralised digital repository for trade notices to improve transparency.