The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has called for a one-time Customs amnesty scheme in the Union Budget 2027–28 to resolve legacy disputes involving approximately Rs 1.5 lakh crore, proposing a waiver of interest and penalties and a graded reduction in disputed duty based on the age and stage of litigation.
In its pre-Budget memorandum, the industry body has sought special priority for disputes involving countervailing duty (CVD) and special additional duty (SAD), which were levied on imports before the introduction of the Goods and Services Tax (GST) in July 2017. CVD was intended to offset central excise duty on domestically manufactured goods, while SAD was imposed to counterbalance state-level taxes such as value-added tax (VAT) and sales tax. Although both levies were subsumed under GST, disputes relating to the pre-GST period continue to remain unresolved.
The Federation of Indian Chambers of Commerce and Industry (FICCI), in its Budget recommendations, has also called for reforms in Customs procedures, including automatic finalisation of provisional assessments if they remain unresolved beyond the prescribed two-year period.
ASSOCHAM has additionally sought time-bound finalisation of provisional Customs assessments, including cases examined by the Special Valuation Branch (SVB), which scrutinises the valuation of imports between related entities to determine whether the relationship has influenced the declared transaction value.
It has proposed that provisional assessments be treated as final if delays are not due to the importer. FICCI has similarly highlighted prolonged pendency of such assessments, which it said increases compliance costs, creates uncertainty and exposes importers to additional duty and interest demands.
FICCI has also called for a risk-based approach to SVB investigations, restricting detailed valuation examinations to cases that warrant scrutiny and introducing a centralised monitoring mechanism to ensure compliance with statutory timelines.
Capital gains taxation
On the direct tax front, both industry bodies have called for changes in capital gains taxation, although their proposals differ.
ASSOCHAM has suggested reducing the long-term capital gains (LTCG) tax rate on listed securities to 10 per cent for holdings exceeding one year but less than two years, and introducing a nil or reduced rate of around 5 per cent for investments held for more than two years. Alternatively, it has proposed allowing credit for Securities Transaction Tax (STT) against LTCG tax liability on long-term holdings.
FICCI, meanwhile, has sought restoration of the LTCG exemption on listed securities, arguing that the levy, reintroduced in 2018 without withdrawing STT, has resulted in a dual tax burden on investors. It has also pointed to the increase in LTCG tax to 12.5 per cent and short-term capital gains tax to 20 per cent from July 23, 2024, saying the combined burden has affected post-tax equity returns.
FICCI has proposed that the existing capital gains tax regime be maintained for a longer period, preferably 10 years, to provide investors with stability and certainty. It has also suggested allowing foreign investors to calculate capital gains in the foreign currency in which the original investment was made, to account for depreciation in the rupee.
Manufacturing and tax certainty
ASSOCHAM has pitched for reintroducing a concessional tax regime for new manufacturing companies on the lines of the erstwhile Section 115BAB of the Income-tax Act, 1961. Introduced in 2019, the provision allowed eligible new domestic manufacturing companies to pay tax at a concessional rate of 15 per cent, subject to certain conditions. The benefit was available to companies that commenced manufacturing by March 31, 2024.
The industry body has sought the revival of a similar regime with relaxed eligibility conditions and a longer operational window to encourage fresh investments, generate employment and improve export competitiveness.
It has also sought tax incentives for research and development (R&D) undertaken jointly by industry and recognised academic institutions, along with accelerated depreciation benefits for data centre infrastructure.
FICCI has, meanwhile, called for expanding the benefit of carrying forward accumulated business losses and unabsorbed depreciation on mergers to all sectors, including services, organised retail and trading. Currently, the benefit is restricted to specified sectors. It has also sought protection for accumulated losses in intra-group reorganisations where ultimate ownership and control remain unchanged.
Simplifying tax compliance
FICCI has called for exempting business-to-business payments that attract GST and are made to GST-registered suppliers from the 0.1 per cent tax deducted at source (TDS) on purchases of goods and e-commerce transactions. It has argued that these transactions are already captured through GST and other digital reporting mechanisms, while TDS leads to working-capital blockage and additional reconciliation requirements.
The industry body has also sought simplification of TDS compliance through the availability of PAN- and invoice-level transaction details in electronic tax-credit records and a downloadable facility for reconciling TDS returns with books of accounts.
ASSOCHAM, for its part, has called for strengthening the Dispute Resolution Committee by raising its eligibility threshold from Rs 10 lakh to Rs 10 crore. It has also sought reforms in the penalty framework, including separate penalty proceedings and a stay on penalty demand until disposal by the Income Tax Appellate Tribunal (ITAT).
FICCI has highlighted delays in tax administration, with its survey indicating that more than 50 per cent of respondents had appeals pending for over two years, 63 per cent faced difficulties in obtaining rectification and nearly 60 per cent reported delays in receiving orders giving effect to appellate decisions.
Both industry bodies have called for a more predictable tax administration framework, reduced litigation and simpler compliance procedures to improve India’s attractiveness as an investment destination.
