Amid global economic uncertainty and concerns over a potential domestic slowdown, legal and tax experts have called for the revival of a one-time settlement scheme under the Customs Act to resolve long-pending tax disputes and unlock capital for both the government and taxpayers.
Experts said such a mechanism would help monetise revenue currently locked in litigation while easing compliance pressures on businesses.
Call for One-Time Dispute Resolution Mechanism
According to tax experts, one of the biggest challenges faced by businesses is the risk of prolonged litigation, with customs and tax disputes often taking several years to resolve.
Drawing parallels with the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, experts have suggested introducing a similar one-time settlement scheme under the Customs Act to address the growing backlog of pending disputes.
They noted that the scheme would enable the government to realise blocked revenue tied up in litigation while providing businesses with much-needed closure.
Push for Greater Tax Certainty
To reduce litigation and improve predictability in tax matters, experts have recommended extending the validity period of advance rulings to five years from the current three years.
They also suggested introducing provisional refunds in cases involving inverted duty structure by amending Section 54(6) of the CGST Act. A risk-based provisional refund mechanism would accelerate access to working capital, reduce refund delays, and place inverted duty refunds on par with zero-rated supplies.
GST Simplification and Input Tax Credit Reforms
Experts have said the Union Budget should prioritise GST simplification by rationalising rates, pruning exemptions, and issuing clear and binding clarifications to minimise interpretational ambiguity.
They also called for addressing procedural bottlenecks in claiming input tax credit (ITC) by easing documentation requirements, reducing reliance on supplier-side compliance, and speeding up the refund process.
Reducing Compliance Burden and Improving Cash Flow
Experts further stressed the need to reduce interpretational ambiguities, consolidate compliances, and limit frequent or retrospective procedural changes.
Faster processing of refunds, relaxation of restrictive provisions such as blocked credits, and improved automated reconciliation mechanisms would significantly enhance cash flow and working capital efficiency for businesses.
Leveraging PLI to Promote AI and Emerging Technologies
Experts have also suggested leveraging the Production-Linked Incentive (PLI) framework to actively promote the adoption and indigenous development of emerging technologies, including:
- Artificial intelligence
- Robotics
- Automation
- Advanced manufacturing solutions
Introducing technology-specific PLIs, R&D-linked incentives, and benefits for Industry 4.0 adoption would help drive innovation, boost productivity, and position India as a global hub for high-tech manufacturing, they said.
Source: The Hindu BusinessLine