Budget 2026-27: FICCI pushes for faster dispute resolution and procedural reforms

Industry body FICCI has outlined a series of expectations from the Union Budget 2026-27, calling for measures to reduce tax litigation, streamline compliance, and ease operational bottlenecks for businesses. The recommendations cover direct and indirect taxes, with a focus on reducing pendency of appeals, simplifying TDS, and facilitating customs procedures.

At the forefront, FICCI highlighted the urgent need to tackle the backlog of appeals before the Commissioner of Income Tax (Appeals), or CIT(A). “Reduction of pendency before CIT(A) is critical to success of new Faceless Appeal system, alleviate hardships faced by taxpayers by way of demands & blockage of refunds,” the body said. Currently, around 5.4 lakh cases involving Rs. 18.16 lakh crore are pending, largely due to the faceless appeal mechanism introduced in 2021.

FICCI recommended prioritising high-value and long-pending cases, filling 40% of CIT(A) vacancies, introducing dual-track disposal for simple and complex cases, and enforcing time-bound hearings. It also suggested automatic approval for virtual hearing requests and real-time document sharing during proceedings to expedite resolution.


On demand stays during appeals, the body called for rationalisation of pre-deposit requirements, proposing alternatives like bank guarantees instead of mandatory cash deposits. This, FICCI argued, would unlock blocked funds without compromising revenue collection.

The body also urged the government to provide tax neutrality for fast-track demergers under Section 233 of the Companies Act, simplify TDS structures to reduce compliance burdens, and clarify that storage of components or equipment by foreign OEMs in India does not create a taxable business connection. “This would strengthen Indian contract manufacturing and improve competitiveness,” FICCI said.

Further recommendations included restoring the definition of Associated Enterprises as per the 1961 Income Tax Act to avoid litigation and ensuring fair taxation of share buybacks, particularly when funded through share premium or fresh issue of shares.

In the indirect tax space, FICCI called for expansion of the Customs Authority for Advance Rulings (CAAR) offices beyond Delhi and Mumbai to cover South and East India. The body also recommended that newly incorporated companies within AEO-accredited groups be eligible for certification, and that trade notices be centralized on a real-time web database for better transparency.

These measures, FICCI argued, would improve ease of doing business, reduce litigation, and enhance operational certainty for taxpayers and traders alike.