Apex industry chamber Assocham on Thursday, 5 November 2026 released its pre-Budget memorandum for Union Budget 2027-28, calling for a stable tax environment, reduced litigation, rationalised capital gains provisions, and stronger positioning of India as a global investment and manufacturing hub. The recommendations span both Direct Tax and Indirect Tax reforms, with the overarching goal of creating a predictable, transparent and investment-friendly regime.

Key Capital Gains Recommendations

On the capital markets front, Assocham has proposed reducing the Long-Term Capital Gains (LTCG) tax rate to 10% for securities held between one and two years, and introducing a nil or reduced rate of approximately 5% for holdings exceeding two years. As an alternative, the chamber has suggested allowing a credit for Securities Transaction Tax (STT) paid to be offset against LTCG tax liability on long-term holdings.

The industry body argued that rationalising the combined burden of LTCG and STT would encourage patient capital, strengthen investor confidence and support the depth of India's capital markets. This comes amid persistent concerns from institutional investors that the current dual-levy structure disincentivises long-duration equity exposure.

Direct Tax: Manufacturing and Technology Sectors

Assocham has recommended introducing a concessional tax regime for new manufacturing companies, with specific coverage for strategic sectors including defence. It has proposed reintroducing a framework along the lines of Section 115BAB of the Income-tax Act, 1961, with reasonable eligibility conditions and a longer operational window to incentivise long-term investment, employment generation and export competitiveness.

Separately, the chamber called for distinct asset classification and accelerated depreciation benefits for data centre buildings, fibre-optic infrastructure, cooling systems, and energy-efficient 5G infrastructure — a signal of the industry's push to anchor India's digital economy ambitions in a supportive tax architecture. The body also sought clarity on tax treatment for foreign companies procuring data centre services through Indian reseller entities, including a reasonable de-minimis threshold for limited direct sales.

Reforms in the Minimum Alternate Tax (MAT) regime were also flagged, particularly for companies that transitioned to concessional tax regimes before 31 March 2026 and units of foreign companies operating in International Financial Services Centres (IFSCs).

Dispute Resolution and Penalty Framework

Assocham proposed a revamp of the penalty framework, recommending separate proceedings for penalty orders, issue-wise specification of charges, expanded immunity provisions, and a stay on penalty demand until disposal by the Income Tax Appellate Tribunal (ITAT). It also called for strengthening the Dispute Resolution Committee by raising its eligibility threshold from ₹10 lakh to ₹10 crore, and revamping the Board for Advance Rulings to ensure time-bound and conclusive decisions — steps the chamber argues are critical to reducing tax litigation that has historically tied up capital and deterred foreign investors.

Indirect Tax: Customs Amnesty and FTA Facilitation

On the Indirect Tax side, the chamber called for a one-time Customs Dispute Resolution (Amnesty) Scheme to resolve legacy disputes, estimated at approximately ₹1.5 lakh crore. It has also proposed automatic refunds following favourable appellate orders, a uniform pre-deposit mechanism, and consolidated assessment and adjudication for multiple Bills of Entry involving identical issues.

With India's growing network of Free Trade Agreements (FTAs), Assocham emphasised rationalising origin verification procedures under Section 28DA and CAROTAR, 2020. It recommended risk-based security requirements, time-bound verification, and acceptance of digitally signed Certificates of Origin to facilitate smoother international trade. As India deepens trade linkages with partners across the Indo-Pacific and beyond, streamlining FTA compliance has taken on fresh urgency.

The pre-Budget memorandum is among the first major industry submissions ahead of the Budget 2027-28 cycle, and sets the tone for a wider lobbying effort that is expected to intensify through December and January.