Industry leaders have urged the government to clear pending Income-Tax (I-T) appeals, simplify TDS compliance procedures, and ensure tax neutrality ahead of Budget 2026.
India Inc seeks faster dispute resolution and easier tax compliance, calling these steps crucial to restoring investor confidence and improving the business climate.
The recommendations were shared during pre-budget consultations, highlighting the need for consistency and predictability in India’s tax policy framework.
Pre-Budget 2026: Industry Seeks Simplified TDS Compliance, Faster I-T Appeals, and Tax Neutrality
The 5.4 lakh pending appeals undermine the intent of the virtual appeals mechanism introduced in 2021
Summary
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India Inc has urged the government to take necessary steps to clear the backlog of Income-Tax (IT) appeals, simplify tax deducted at source (TDS) rules, and ensure tax neutrality for fast-track demergers during its pre-budget consultation with Revenue Secretary Arvind Shrivastava on Tuesday.
The Federation of Indian Chambers of Commerce and Industry (FICCI) told the finance ministry that 5.4 lakh appeals worth ₹18.16 trillion are pending before Commissioners of Income Tax (Appeals) [CIT(A)], Business Standard reported. The massive pending appeals undermine the intent of the virtual appeals mechanism introduced in 2021, the report said.
Central Action Plan Targets Disposal of Two Lakh Cases in FY26
CNBC reported that the Central Action Plan for 2025-26 aims to dispose of two lakh cases and ₹10 trillion of disputed demand, but FICCI warned that without differentiated timelines or capacity expansion, the backlog may remain.
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FICCI Seeks Dual-Track System for Appeals
The industry body also highlighted the need to set time-bound disposal targets, fill 40% vacancies at the CIT(A) level, and adopt a dual-track system to fast-track simple, low-value cases while allowing detailed scrutiny for complex cases. FICCI also recommended automatic approval of virtual hearings within two weeks and refund or stay of demand where appeals remain pending for over two years without taxpayer fault, the report said.
Call for Tax Neutrality in Fast-Track Demergers
FICCI also recommended rationalizing the stay of demand rules in order to ease working capital pressure, reports said. The industry body has also urged for tax neutrality for fast-track demergers under Section 233 of the Companies Act, 2013, saying that denying such treatment undermines the government’s ease of doing business objectives and burdens the National Company Law Tribunal (NCLT) with small intra-group cases.
FICCI’s Recommendations on Simplifying TDS Rules
On the TDS front, FICCI pointed out that the current structure, which consists of 37 separate provisions ranging from 0.1–30%, adds unnecessary compliance burden. India Inc has suggested reducing them into three broad rate slabs instead and exempting B2B (business-to-business) payments, which are already covered under Goods and Services Tax (GST).
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