Budget 2027–28: ASSOCHAM calls for tax reforms to boost investment, manufacturing, ease of doing business and tax certainty

ASSOCHAM, in its Pre-Budget Memorandum for the Union Budget 2027–28, has put forward a comprehensive set of recommendations on Direct and Indirect Tax reforms, calling for a predictable, transparent and investment-friendly tax regime to accelerate India's economic growth, strengthening domestic manufacturing, attract global investments and improve the ease of doing business.

The recommendations focus on creating a stable tax environment, reducing litigation, rationalising tax provisions and strengthening India's competitiveness as a global investment and manufacturing destination, as per the industry body.

Boosting Investment and Manufacturing


On the Direct Tax front, ASSOCHAM has recommended introducing a concessional tax regime for new manufacturing companies, including those operating in strategic sectors such as defence. The industry body has suggested reintroducing a regime on the lines of Section 115BAB of the Income-tax Act, 1961, with reasonable eligibility conditions and a longer operational window to encourage long-term investments, employment generation and export competitiveness.

Recognising the growing importance of digital infrastructure, ASSOCHAM has called for a distinct asset classification and accelerated depreciation benefits for data centre buildings, fibre-optic infrastructure, cooling systems and energy-efficient 5G infrastructure. It has also sought clarity on certain provisions regarding tax certainty for foreign companies procuring data centre services for providing digital content and cloud services through Indian reseller entities, including a reasonable de-minimis threshold for limited direct sales.

To strengthen innovation and technology development, ASSOCHAM has proposed encouraging industry–academia collaboration in Research and Development (R&D), including weighted or full deductions for eligible expenditure on approved R&D programmes undertaken with recognised universities and research institutions.

Rationalising Capital Gains Tax and Strengthening Investor Confidence

ASSOCHAM has called for rationalisation of the taxation of long-term capital gains on listed securities to encourage long-term investments and improve capital market participation. It has suggested reducing the LTCG tax rate to 10% for securities held for more than one year but less than two years and introducing a NIL or reduced rate of around 5% for holdings exceeding two years. Alternatively, a credit for Securities Transaction Tax (STT) against LTCG tax liability has been proposed for long-term holdings.

The industry body believes that rationalising the combined tax burden of LTCG and STT would encourage patient capital, strengthen investor confidence and support India's capital markets.

Greater Tax Certainty and Reduction in Litigation

Emphasising the need for a predictable tax administration framework, ASSOCHAM has recommended reforms in the Minimum Alternate Tax (MAT) regime, particularly for companies who had transitioned to concessional tax regimes prior to 31 March 2026 and units of foreign companies operating in International Financial Services Centres (IFSCs).

It has also sought greater clarity on taxation of contingent consideration in business transactions, profit attribution to Permanent Establishments (PEs), treaty benefits, transfer pricing provisions and the applicability of General Anti-Avoidance Rules (GAAR).

Further, ASSOCHAM has proposed reforms in the penalty framework, including separate proceedings for penalty orders, issue-wise specification of charges and expansion of immunity provisions and stay of penalty demand till disposal by ITAT. It has also recommended strengthening the Dispute Resolution Committee by increasing its eligibility threshold from Rs. 10 lakh to Rs. 10 crores and revamping the Board for Advance Rulings to ensure time-bound and conclusive decisions.

Comprehensive Customs Reforms and Ease of Doing Business

On the Indirect Tax front, ASSOCHAM has called for a one-time Customs Dispute Resolution (Amnesty) Scheme to resolve legacy disputes, estimated at approximately Rs. 1.5 lakh crore. The proposed scheme should provide a waiver of interest and penalties, along with a graded waiver of disputed duty based on the stage and age of the dispute. Special priority has been sought for legacy CVD and SAD disputes, which continue despite these levies having been subsumed under GST.

The industry body has also recommended introducing time-bound finalisation of provisional assessments, including Special Valuation Branch (SVB) cases, with deemed finalisation where delays are not attributable to importers. It has sought prescribed timelines for issuing notices and completing adjudication under Section 28AAA of the Customs Act.

To reduce procedural complexities, ASSOCHAM has proposed automatic refunds following favourable appellate orders, a uniform pre-deposit mechanism and consolidated assessment, adjudication and appeals for multiple Bills of Entry involving identical issues.

Strengthening Trade Facilitation and Manufacturing Competitiveness

With India's expanding network of Free Trade Agreements (FTAs), ASSOCHAM has emphasised the need to rationalise origin verification procedures under Section 28DA and CAROTAR, 2020. It has recommended risk-based security requirements, time-bound verification and acceptance of digitally signed Certificates of Origin to facilitate smoother international trade.

The industry body has also sought a permanent framework allowing Special Economic Zone (SEZ) units to clear goods into the Domestic Tariff Area (DTA) on a duty-foregone basis, subject to appropriate safeguards. This would help improve utilisation of existing manufacturing capacities and strengthen domestic value addition.

Further, ASSOCHAM has recommended greater flexibility under the Manufacture and Other Operations in Warehouse Regulations (MOOWR), including clarification of the definition of 'owner' to facilitate contract manufacturing, depreciation benefits on capital goods and periodic payment of duties.

Other important recommendations include rationalising the Authorised Economic Operator (AEO) programme, simplifying renewal procedures, ensuring continuity of AEO status during corporate restructuring and providing a dedicated appellate mechanism for Customs advance rulings through the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

Towards a Predictable and Competitive Tax Ecosystem

ASSOCHAM's recommendations underscore the importance of a tax framework that balances revenue considerations with the need to facilitate investment, encourage entrepreneurship and support India's integration into global value chains.

The proposed reforms, spanning Direct and Indirect Taxes, aim to reduce compliance costs, minimise avoidable litigation, enhance investor confidence and create a more competitive environment for domestic and international businesses.

ASSOCHAM believes that a simplified, stable and predictable taxation system will play a crucial role in supporting India's growth ambitions, strengthening manufacturing capabilities and advancing the vision of Viksit Bharat.