New Delhi, Jan 13 (NationPress) The leading business organization, FICCI, on Tuesday shared its primary anticipations from the Union Budget 2026-2027 concerning direct taxes and customs collection procedures. These include a call for a reduction in the backlog of appeal cases and the establishment of tax neutrality for expedited mergers.

A statement from FICCI emphasized the importance of mitigating the backlog before the Commissioner of Income Tax, Appeals, as it is vital for the efficacy of the new Faceless Appeal system. This would significantly ease the burdens faced by taxpayers due to demands and delays in refunds.

Currently, there is a staggering backlog of appeals pending before CIT(A), with approximately 5.4 lakh cases unresolved as of April 1, 2025, involving a total of ₹18.16 lakh crore.

Moreover, the Central Action Plan (CAP) for 2025-26 aims to resolve 2 lakh cases and clear ₹10 lakh crore of disputed demands related to various charges, including international tax and transfer pricing. FICCI cautioned that without enhancing capacity or establishing differentiated tracks and timelines for case resolutions, clearing this backlog will be infeasible.

Pending litigations are reflected as contingent liabilities in corporate accounts, negatively impacting share valuations during sales by Indian promoters to foreign direct investment (FDI) investors. The government also suffers revenue losses due to the extensive backlog of cases, as noted in the statement.

FICCI also urged the rationalization of provisions to enable full stays of demand during appeal processes to free up funds tied up in litigation, thus easing working capital constraints for taxpayers without harming revenue collection interests.

Additionally, the business association indicated that clarifying the tax neutrality of fast-track demergers would facilitate restructuring within smaller companies and intra-group changes more swiftly, alleviating the burden on the NCLT for processing such requests and improving the ease of doing business without compromising revenue interests.

Furthermore, FICCI requested the reinstatement of the Associated Enterprise (AE) definition in the new Act to maintain tax policy continuity as recommended by the Select Committee. This would offer certainty on transfer pricing compliance for taxpayers and mitigate unnecessary litigation regarding AE coverage, as stated.

In terms of indirect taxes, FICCI suggested increasing the number of offices for the Customs Authority for Advance Rulings (AAR). Expanding these offices and permitting self-declared extensions would bolster trade certainty, lessen compliance burdens, and diminish customs-related litigation.

Currently, AAR offices are only located in New Delhi and Mumbai, with jurisdiction split between the two. This setup fails to accommodate the numerous applications from trade at ports in southern and eastern India, like Chennai, Hyderabad, and Kolkata.

Thus, FICCI requested the establishment of at least two additional AAR offices in southern and eastern India. This initiative would greatly enhance trade certainty and lower customs litigation, the statement concluded.

Lastly, FICCI called for measures to assist importers and exporters through a centralized web database for real-time Trade Notices to improve transparency and streamline access.

At present, various Customs Commissionerates issue Trade Notices to facilitate the export and import processes. These notices can be accessed via the respective Customs Commissionerate's website, or in some cases, importers/exporters must visit the Customs House to obtain them. The proposed centralized system would enhance assessment transparency and ensure uniform assessment practices across all customs ports, the statement added.