FICCI Urges Major Tax Reforms To Cut Litigation, Ease Compliance In Budget 2026–27
FICCI warned that delays under the faceless appeal system have worsened since 2021 and urged differentiated timelines for small and large-value disputes.
Industry body Federation of Indian Chambers of Commerce & Industry (FICCI) has urged the government to use the upcoming Union Budget 2026–27 to clear tax backlogs, streamline compliance, and provide greater policy certainty for businesses.
In its submission to Revenue Secretary Arvind Shrivastava today, the body's top ask is a time-bound plan to reduce pendency before the Commissioner of Income Tax (Appeals), where nearly 5.4 lakh cases worth Rs 18.16 lakh crore remain unresolved.
FICCI warned that delays under the faceless appeal system have worsened since 2021 and urged differentiated timelines for small and large-value disputes. It recommended filling 40% vacancies at the CIT(A) level, introducing a dual-track disposal system, and mandating automatic approval of virtual hearings to speed up case resolution.
The chamber also sought digitisation of stay orders to prevent the Central Processing Centre from wrongly adjusting refunds against stayed demands. It urged the government to allow bank guarantees or indemnities in place of the current 20% cash pre-deposit rule, a step it said would ease working capital pressures without compromising revenue safeguards.
FICCI further called for tax neutrality on fast-track demergers under Section 233 of the Companies Act, arguing that such schemes already face regulatory scrutiny and help reduce National Company Law Tribunal (NCLT) load. It also proposed simplifying the TDS regime by collapsing 37 different categories into a few standard rates and exempting GST-backed B2B payments.
To promote manufacturing competitiveness, the body urged clarity that storage of components or deployment of equipment in India by foreign OEMs for contract manufacturing will not trigger a "business connection" or tax liability.
It also sought restoration of the Associated Enterprise (AE) definition from the old Income Tax Act to avoid new transfer pricing disputes, and parity in taxation between share buybacks and capital reductions, especially for buybacks funded from share premium or fresh issues.
On the indirect tax front, FICCI called for expanding Customs Advance Ruling offices beyond Delhi and Mumbai, AEO certification for new or merged group entities, and creation of a centralised online database for trade notices to ensure uniform customs practices across ports.
