Industry body Ficci on Tuesday called for the simplification of the tax deducted at source (TDS) structure in the 2026-27 budget, stating that the decision will “considerably ease the compliance burden on the taxpayers and avoid litigation due to characterisation disputes”.
During pre-budget consultations with Revenue Secretary Arvind Shrivastava, it also suggested that there be fewer rates for TDS payments, compared with the multiple rates now – on salaries at slab rate, on lotteries/online games, etc at maximum marginal rate, and two standard rates for different categories.
Currently, there are 37 different types of TDS payments to residents, where the rates vary widely from 0.1% to 30%.
The industry body stated that the continuous expansion of provisions of TDS on payments to residents have added to the compliance burden of the taxpayers.
“Under the Income Tax Act, there is a wide variety of TDS provisions applicable to payments to residents with different rates and different thresholds. This gives rise to unwarranted disputes related to categorisation and interpretation. It also leads to cash flow blockage for the industry and interest cost for the government on refunds,” FICCI said.
Besides, the industry body also suggested providing tax neutrality for fast-track de-merger and stated that this will help small-sized companies and enable intra-group restructuring in a smaller time-frame and relieve the burden on the National Company Law Board for processing such applications. It also suggested a reduction of pendency before the Commissioner of Income Tax (Appeal), terming it critical to the success of the new faceless appeal system.
The Ficci also sought the constitution of more offices of the Customs Authority for Advance Rulings, stating that this would enhance trade certainty and reduce compliance burden, and lower litigation.
The Finance Ministry has called for suggestions from trade and industry on tax rate changes and ease of compliance expected in the Union Budget for the 2026-27, by November 10.
The revenue secretary will hold pre-budget meetings with other chambers as well during the week. He is scheduled to meet the PHD Chamber of Commerce and Industry on Wednesday and the CII on Friday.