Archive · 28 Oct 2025
FICCI Urges Finance Ministry for TDS Norms Simplification and Appeal Pendency Reduction
A big business group called FICCI wants to make tax rules simpler for the government's next budget.
They are particularly focused on a tax called TDS, which is taken out before someone even gets paid.
Right now, there are too many different TDS rules and rates, making it hard for businesses to follow and causing arguments.
FICCI wants fewer rules and just three main rates to make things easier.
They also want the government to deal with a lot of old tax cases that are stuck before the first level of appeal, which causes problems for people and businesses.
FICCI believes solving these old cases will help a new system work better.
They also suggested making it easier for companies to split apart into smaller ones without extra taxes, which helps small businesses grow.
Finally, they want a specific tax rule about companies working together to be the same as it was before, to avoid confusion and legal fights.
They gave these ideas to the government on Tuesday.
FICCI urged the Finance Ministry to rationalize Tax Deducted at Source (TDS) norms and reduce the number of TDS payment types and rates.
The industry body highlighted that the current system with 37 TDS payment types and varied rates leads to compliance burden, disputes, and cash flow blockage.
FICCI recommended reducing the number of TDS rate structures to three: slab rate for salary, maximum marginal rate for lotteries/online games, and two standard rates.
The organization also called for a reduction in the significant pendency of appeals before the Commissioner of Income Tax-Appeal (CIT(A)) and suggested filling vacancies.
Further suggestions included providing clarity on tax neutrality for fast-track demergers and restoring the Associated Enterprise definition from the old Act.
- Who
- FICCI (Federation of Indian Chambers of Commerce & Industry)
- What
- Urged the Finance Ministry to rationalize TDS norms, reduce appeal pendency, and suggested clarity on tax neutrality for demergers and restoration of the old Associated Enterprise definition.
- When
- Tuesday, October 28, 2025, in a pre-budget memorandum.
- Where
- Submitted to the Revenue Secretary in New Delhi.
- Why
- To ease compliance burden on taxpayers, avoid litigation, reduce cash flow blockage, enhance ease of doing business, and maintain tax policy certainty.
FICCI's Stance
Current System Implications
TDS Rate Structure
FICCI's Stance
Advocates for a simplified TDS rate structure with three categories: slab rate for salary, maximum marginal rate for lotteries/online games, and two standard rates for other TDS payments. This aims to ease compliance and reduce litigation.
Current System Implications
Currently, there are 37 TDS payment types with rates ranging from 0.1% to 30%, leading to disputes, interpretation issues, cash flow blockage for businesses, and interest costs for the government on refunds.
Pendency of Appeals
FICCI's Stance
Seeks reduction in pendency before the Commissioner of Income Tax-Appeal (CIT(A)) to support the Faceless Appeal system and alleviate taxpayer hardships related to demands and refund blockages. Recommends prioritizing certain case types and filling vacancies.
Current System Implications
A significant number of appeals (around 5.4 lakh cases involving ₹18.16 lakh crore) are pending before CIT(A) as of April 1, 2025, hindering the efficiency of the appeal process.
Tax Neutrality for Demergers
FICCI's Stance
Seeks clarity on tax neutrality for fast-track demergers to facilitate smaller company restructuring and intra-group reorganizations, thereby easing the burden on NCLT and improving the ease of doing business.
Current System Implications
Current provisions regarding tax neutrality for demergers may not adequately facilitate restructuring for smaller companies or intra-group reorganizations without potentially impacting revenue interests.
Associated Enterprise (AE) Definition
FICCI's Stance
Proposes restoring the Associated Enterprise definition from the old Act to the new Act to maintain policy continuity, provide certainty in transfer pricing compliance, and prevent litigation.
Current System Implications
The definition of Associated Enterprise in the new Act may differ from the old Act, potentially creating uncertainty in transfer pricing compliance and leading to litigation.
- Organization
- FICCI (Federation of Indian Chambers of Commerce & Industry)
- Recipient
- Finance Ministry, Revenue Secretary Arvind Srivastava
- Context
- Pre-budget memorandum submission for the upcoming budget
- Key Suggestion 1
- Rationalize TDS norms and rate structure
- Current TDS Payment Types
- 37
- Current TDS Rate Range
- 0.1% to 30%
- Key Suggestion 2
- Reduce pendency before Commissioner of Income Tax-Appeal (CIT(A))
- Pending Cases before CIT(A)
- ~5.4 lakh cases
- Amount Involved in Pending Appeals
- ₹18.16 lakh crore
- Date of Submission
- Tuesday, October 28, 2025
