Fast-track high-value tax disputes, revamp TDS rules: CII to govt

The Confederation of Indian Industry (CII) has urged the government to make India’s tax system more trust-based, simpler, and technology-driven in the Union Budget 2026-27, with a focus on faster dispute resolution and easier Tax Deducted at Source (TDS) rules. “India’s next leap requires a principle-based, technology-enabled, and trust-anchored tax system,” CII Director-General Chandrajit Banerjee said after the industry body met the revenue secretary on Friday.

 

CII noted that tax litigation continues to burden businesses, with more than five lakh appeals involving nearly ₹18 lakh crore pending before the commissioner (appeals). It asked the government to fast-track cases involving more than ₹100 crore and resolve them within one year through virtual hearings and close monitoring by the Central Board of Direct Taxes (CBDT). Penalty proceedings should be paused till the main appeal is settled, and draft orders should be shared for factual checks before being finalised, it suggested. CII also sought revival of the Authority for Advance Rulings (AAR) under retired high court judges, “empowered to deliver binding rulings within six months”.

   

To build taxpayer confidence, CII called for converting the existing taxpayer charter into a legal Taxpayer Rights Charter guaranteeing time-bound refunds, faceless assessments, and accountability for administrative delays. It also flagged issues in the Central Processing Centre (CPC) system for return processing and asked for “improved protocols ensuring that only apparent mistakes are adjusted automatically and that taxpayers can request virtual hearings when required”.

 

On direct tax simplification, CII said the TDS and Tax Collected at Source (TCS) framework — with more than 35 categories and multiple rates — has become too complex and affects business liquidity. It recommended reducing the framework to two or three broad rates, exempting transactions between Goods and Services Tax (GST)-registered entities, and clarifying that no TDS should apply to the GST portion of a payment. “Tax simplification is not a concession; it is an investment in governance efficiency,” Banerjee said. “When rules are clear and systems are digital, compliance becomes automatic and disputes become exceptional.”

 

On indirect taxes and customs, CII pitched a one-time settlement scheme for old disputes, longer validity for advance rulings, and full digital processing of customs through Application Programming Interface (API)-based systems. It suggested a roadmap for “paper-free customs by 2028” with e-refunds, e-adjudication, and e-appeals. CII also called for rationalising tariffs by consolidating exemption notifications and permitting a single appeal for multiple bills of entry (BoE) where issues are common, along with automatic release of bonds once export obligations are met.

 

To improve predictability, CII suggested a multi-year corporate tax roadmap and removal of prosecution for minor and unintentional errors under both direct and indirect tax laws. “CII’s proposals are not about cutting taxes, but they are about cutting friction,” Banerjee said, adding that a trust-based compliance system can boost revenues without hurting the exchequer.

 

“India has already shown the world that large-scale reforms like GST 2.0 can succeed,” he said. “If we now make our tax systems as simple and predictable as they are digital and fair, we will not only raise revenues more efficiently but also build the foundations of an economy that inspires confidence — both at home and abroad.”