The Confederation of Indian Industries (CII), a prominent industry organization, recommended transforming the taxation system to focus on 'preventing disputes' rather than being 'driven by disputes'.

The body also urged for a determined shift toward a compliance framework based on trust, simplicity, and technological solutions.

During a discussion with Revenue Secretary Arvind Srivastava, the CII shared their suggestions for the upcoming Union Budget 2026-27. The industry group believes it's time for India's tax system to move away from creating disputes and instead focus on preventing them from happening in the first place.

Right now, there are over 5 lakh tax appeals sitting with Commissioners, and these cases involve a massive ₹18 lakh crore in disputed amounts. To tackle this problem, the CII has suggested that all big-ticket cases worth more than Rs.100 crore should get priority treatment and be sorted out within a year using online hearings and close oversight from the CBDT.

The penalty cases that run alongside the main proceedings should stay on hold until the primary appeal gets sorted out, and they should share the draft orders so people can check the facts before they finalize anything.

CII also pushed for bringing back the Authority for Advance Rulings as a separate, court-like organization run by former High Court judges who can make decisions that everyone has to follow within six months, and they want industry groups to be able to apply together when they need clarity for their whole sector.

"The next stage of reform must ensure that taxation not only raises revenue efficiently but also acts as a catalyst for investment, innovation and competitiveness. The Budget can be a pivot for a truly modern, transparent and globally benchmarked tax regime,” says CII Director-General Chandrajit Banerjee.

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To promote a dispute-preventive taxation system, CII underlined that persistent anomalies in return-processing software at the Central Processing Centre must be addressed through improved protocols ensuring that only apparent mistakes are adjusted automatically and that taxpayers can request virtual hearings when required.

The industry group pointed out that a second key change involves building stronger trust with taxpayers. They suggested that the current Taxpayer Charter needs to be upgraded to become a legal Statutory Taxpayer Rights Charter.

This would legally ensure that taxpayers get their refunds on time, go through anonymous assessments and appeals, and hold officials responsible when there are administrative delays. The industry body explained that passing this kind of law would clearly show that honest taxpayers are being treated fairly and with proper respect.

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The CII has pinpointed a third key area for reform - making the direct tax system much simpler. They've pointed out that India's current TDS/TCS setup is way too complicated, with over thirty-five different categories and tax rates that can be anywhere from just 0.1 percent all the way up to 30 percent.

This complexity is causing real headaches when it comes to matching records and is putting a squeeze on cash flow for businesses. To fix this, they're suggesting we cut it down to just two or three main categories.

 

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They also think we should skip the TDS requirement for deals between businesses that are already registered for GST, since those transactions are already being tracked digitally anyway. On top of that, the CII wants the government to issue clear guidelines stating that TDS shouldn't apply to the GST portion when payments include multiple components.