Industry body Federation of Indian Chambers of Commerce & Industry (FICCI) has submitted a comprehensive set of recommendations to the government ahead of the Union Budget 2026-27, seeking faster tax dispute resolution, simplified compliance, greater certainty for global manufacturers, and smoother trade facilitation.
FICCI said the proposed measures would ease liquidity pressures on businesses, reduce litigation, and strengthen India's position as a preferred global manufacturing and investment destination.
Direct Tax: Clearing Appeal Backlogs and Improving Liquidity
FICCI has expressed serious concern over the mounting pendency of income tax appeals before Commissioners of Income Tax (Appeals). According to the industry body, over 5.4 lakh appeals involving disputed tax of nearly Rs 18.16 lakh crore remain unresolved.
To address this, FICCI has urged the government to:
- Expedite filling of vacancies in appellate authorities
- Introduce fast-track and complex-case appeal streams
- Fix strict timelines for submission of remand reports
- Allow refunds where appeals remain pending beyond two years, provided delays are not attributable to taxpayers
Such steps, FICCI said, would unlock blocked working capital and improve ease of doing business.
Stay of Demand: Call for Practical Implementation
Despite existing stay-of-demand guidelines, taxpayers are often compelled to deposit 20% of disputed tax and still face automated refund adjustments by the Centralised Processing Centre (CPC).
FICCI has proposed:
- Real-time system integration between stay orders and CPC
- Acceptance of bank guarantees or other securities instead of cash deposits
This, it said, would prevent hardship caused by mechanical recovery actions.
Business Restructuring: Tax Neutrality for Fast-Track Demergers
On corporate restructuring, FICCI has recommended that fast-track demergers under the Companies Act be made explicitly tax-neutral, in line with regular demergers.
In the absence of tax clarity, companies may avoid the fast-track route, undermining its objective of reducing the burden on NCLT and speeding up restructuring.
Global Manufacturing and 'Make in India' Push
To support contract manufacturing and the Make in India initiative, FICCI has sought clarity that activities such as:
- Storage of components
- Just-in-time inventory management
- Deployment of free-of-cost equipment by foreign OEMs
should not constitute a taxable business connection in India.
Such clarity, it noted, would encourage global companies to bring advanced technology and efficient supply chains into the country.
TDS Rationalisation and Transfer Pricing Certainty
Highlighting the complexity of current withholding provisions, FICCI pointed out that there are over 37 different TDS rates under the Income tax law.
Its key suggestions include:
- Rationalising TDS into a few standard rates
- Exempting GST-linked B2B payments from TDS
- Introducing a clear negative list of non-taxable payments
FICCI has also called for restoration of the earlier definition of "Associated Enterprise", warning that changes under the new Income Tax Act could trigger fresh transfer pricing disputes.
Buyback Taxation: Addressing Anomalies
FICCI has flagged concerns in the new buyback tax regime, particularly where buybacks are funded through share premium or fresh issue proceeds.
It has suggested that such transactions be treated more akin to capital reduction, rather than being classified as deemed dividends, to avoid unintended tax consequences.
Indirect Tax and Customs: Trade Facilitation Measures
On the indirect tax front, FICCI has recommended several customs-related reforms, including:
- Setting up Advance Ruling offices beyond Delhi and Mumbai
- Easier extension of the validity of advance rulings
- Allowing AEO benefits to newly incorporated group entities
- Creating a centralised, real-time database for all customs trade notices
These steps, FICCI said, would enhance transparency and certainty for importers and exporters.
Budget 2026-27: Industry Push for Certainty and Speed
FICCI's recommendations reflect industry's demand for predictability, faster resolution, and reduced compliance friction. With Budget 2026-27 approaching, the government's response to these proposals will be closely watched by corporates, global investors and tax professionals alike.
CAclubindia
