ASSOCHAM Urges Customs Amnesty Scheme to Resolve ₹1.5 Trillion Disputes

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has recommended the introduction of a one-time Customs amnesty scheme in the upcoming Union Budget for 2027-28. This initiative targets the resolution of longstanding Customs duty disputes amounting to approximately ₹1.5 trillion. The proposal includes waiving interest and penalties and applying a tiered reduction in disputed duties depending on the dispute's age and litigation status.

In its pre-Budget memorandum, ASSOCHAM highlighted the need to prioritize cases involving countervailing duty (CVD) and special additional duty (SAD) charged on imports before the Goods and Services Tax (GST) was implemented in July 2017. These levies were originally imposed to balance tax rates between imported and domestically produced goods. Specifically, CVD was designed to offset central excise duty on home-manufactured products, while SAD aimed to counteract state-level taxes such as value-added tax (VAT) and sales tax. With the advent of GST, both duties were integrated into the new tax framework, yet disputes from the pre-GST era remain unresolved, creating uncertainty for businesses.

The amnesty scheme is intended to help companies settle these persistent disputes, reduce ongoing litigation, and free up financial resources currently tied in tax proceedings. ASSOCHAM also urged the government to ensure that provisional Customs assessments, including those reviewed by the Special Valuation Branch (SVB)—which examines import valuations between related parties to prevent underreporting and duty evasion—are finalized within a defined timeframe. The industry body suggested that if delays are not attributable to the importer, provisional assessments should automatically be considered final.

On the direct tax front, ASSOCHAM proposed reinstating a concessional tax regime similar to the now-expired Section 115BAB of the Income-tax Act, 1961, which was introduced in 2019. This provision offered eligible new manufacturing companies a reduced tax rate of 15 percent, conditional on the start of manufacturing by March 31, 2024. The association recommended extending this benefit with relaxed eligibility criteria and a longer window to stimulate fresh investments, job creation, and enhance export competitiveness.

Further, the industry group suggested changes to the taxation of long-term capital gains (LTCG) on listed securities. It recommended lowering the LTCG tax rate to 10 percent for holdings between one and two years and reducing it to around 5 percent or exempting it altogether for investments held beyond two years. Alternatively, ASSOCHAM proposed allowing investors to offset their LTCG tax liability by crediting securities transaction tax (STT) paid on long-term holdings.

To increase tax certainty and reduce litigation, the chamber called for strengthening the Dispute Resolution Committee by raising the eligibility threshold from ₹10 lakh to ₹10 crore. Additionally, it sought reforms in the Board for Advance Rulings to ensure faster, definitive rulings.

Other key recommendations included tax incentives for research and development activities conducted jointly by industry and accredited academic institutions. The body also advocated for accelerated depreciation benefits for data center infrastructure and clearer guidelines on the taxation of foreign companies acquiring data center services through Indian resellers.

These proposals reflect ASSOCHAM's broader goal of lowering compliance costs, curbing tax disputes, and fostering a predictable tax environment. Such reforms are intended to attract both domestic and international investments, thereby supporting economic growth and industrial development in India.