Structured dispute resolution tops tax reform wishlist, ETCFO
New Delhi: Faster and structured tax dispute resolution and use of mediation along with enhancing transfer-pricing certainty via quicker processing of Advance Pricing Agreements (APA) are the top two direct tax reforms which should be prioritised in the budget to improve India’s competitiveness and investment climate, according to a survey by ET-PwC.
As per the survey results, 44% of the respondents have pushed for faster tax dispute resolution and use of mediation while 39% sought faster APA processing. Rationalisation of corporate tax incentives for manufacturing and simplification of withholding tax provisions are the other tax reforms they want.
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Finance minister Nirmala Sitharaman will present Budget 2026-27 on February 1.
All surveyed healthcare and pharmaceutical companies want tax dispute resolution, whereas 70% of infrastructure firms have sought transfer-pricing certainty.
On the survey questionnaire on which tax reforms would improve the robustness of litigation and dispute resolution in India, 34% of the interviewees pointed to accountability for high-pitched assessments and 32% sought time-bound disposal of tax appeals.
As much as 83% of the companies with revenue of ₹500-999 crore want accountability for high-pitched assessments. Formal adoption of mediation for tax disputes and lower pre-deposit requirements for appeals are also among the reforms sought.
Companies with revenue above ₹5,000 crore want all the four reforms to figure in the upcoming budget.
The survey covered 41 CFOs from companies having revenue less than ₹500 crore to more than ₹10,000 crore across health and pharma, technology, manufacturing, infrastructure, consumer goods & retail and finance sectors.
Businesses want this budget to lock in stability while also deploying more enabling, well-targeted incentives to crowd in private investment and trade. With the new Income-tax Act, 2025, taking effect from 1 April 2026, the focus is on smooth transition of existing circulars, stronger dispute resolution, and a more effective APA and safe harbour framework, especially for complex cross-border and transfer pricing cases. At the same time, targeted tax incentives for data centres, GCCs, manufacturing, and financial-sector vehicles such as business trusts and AIFs, including those in the IFSC, would strengthen India’s attractiveness as an investment and services hub. On the indirect tax side, industry expects customs rate rationalisation to address duty inversions, a one-time customs dispute settlement scheme, and more trade facilitation through digitisation and risk-based clearances, alongside a more competitive regime for SEZ-to-DTA clearances. A budget that combines predictability with such enabling incentives can reinforce India’s competitiveness without disturbing the broader framework of rate stability.” – Kunj Vaidya, Partner and Tax & Regulatory Markets Leader, PwC India.
Also Read: Budget 2026: Industry leaders seek funding framework for innovation, R&D in pharma, MedTech
GCC reforms
On being asked which tax reform would accelerate global capability centre (GCC) expansion in India the most, 51% respondents favoured stronger and clearer transfer-pricing safe harbour rules and 22% mentioned faster APA processes. Simplified compliance during setup and early growth were demanded by 15% whereas 12% wanted clearer guidance on permanent establishment rules.
India hosts more than 1,750 GCCs with about 2,975 units. Over 220 units are located in tier-2 and -3 cities which reflects the increasing decentralisation of GCCs beyond metropolitan centres.
“These GCCs together generated $64.6 billion in revenue during FY25. As per industry’s estimate, India’s GCC market is projected to reach $110 billion by 2030,” minister of state for electronics and information technology Jitin Prasada told the Lok Sabha last month.
The number of GCCs in the country is expected to grow to around 2,400-2,550 by 2030, he added.
As per the ET-PwC survey, at least a third of all industry segments surveyed want robust transfer-pricing safe harbour rules. The demand was echoed by all the respondents in the ₹500-999 crore revenue range. Companies with a turnover of ₹5,000 crore and above want reform on all the four tax areas for GCCs to grow.
To strengthen India’s GCC ecosystem, the last budget announced that a national framework would be formed to guide states on promoting GCCs in tier-II cities. The framework would suggest measures for enhancing availability of talent and infrastructure, building bye law reforms, and mechanisms for collaboration with industry. The proposed national framework is intended to act as an enabling and guiding mechanism for states. Financial incentives for GCCs are implemented through state-specific policies, while the union government supports the ecosystem through digital infrastructure, skilling initiatives and ease-of-doing-business reforms.
Also Read: Budget 2026 key to India’s GCCs becoming the world’s next innovation engines
Indirect tax
On customs reforms, 39% of those surveyed want end-to-end digitisation of customs processes to get accelerated followed by 34% respondents seeking liberalisation of the Manufacturing and Other Operations in Warehouse (MOOWR) scheme. The scheme allows manufacturers to import raw materials and capital goods without paying duty.
More than a third of the respondents in banking, financial services and insurance (BFSI), consumer and retail, healthcare, manufacturing and technology want the MOOWR scheme to be liberalised, according to the survey results.
A fifth of the surveyed want an amnesty scheme to resolve legacy disputes and only 7% have sought an alignment of customs and transfer-pricing valuations. Infrastructure and technology firms want reforms on all these fronts.
Interestingly, digitisation of customs processes is the only focus area of companies with revenue below ₹500 crore while those in the ₹500-4,999 crore band also want reforms in the MOOWR scheme and an amnesty scheme for legacy issues.
