Budget 2026: Tax Time Bombs, Big Backlogs And What Needs Fixing Now

New Delhi: With the Union Budget 2026 less than three weeks away, experts and industry groups have begun airing clear demands. Beyond the usual bets on tax rates and spending plans, many voices say the budget must tackle deeper economic and structural problems. The focus, they argue, should be on fixing long-standing bottlenecks that disrupt business, jobs and investment. 

What's the Main Problem?

Industry groups point to a huge pile-up of unresolved tax disputes. At the Commissioner of Income Tax (Appeals) level alone, more than 5.4 lakh cases are pending, involving disputed tax claims of over Rs 18 lakh crore. These appeals have dragged on for years, tying up capital and keeping business leaders and investors on edge.

Here are the five big issues business groups want Budget 2026 to tackle:

How can the appeal backlog be cut down faster?

Industry bodies say the first appellate authority has become a chokepoint. They want priority handling for complex and high-value cases, filling vacant positions, and a faster track for simple disputes. Delays now often stretch beyond five years.

Should stay of disputed tax demands be made easier?

Right now, companies often must pay a large portion of a disputed tax to get a stay order. Experts argue this ties up working capital. They want options like bank guarantees and a digital system that automatically protects refunds when stays are in place.

What can be done about administrative delays and hardships?

Even when businesses win appeals, they often wait months for refunds. Tax professionals say system-driven timelines for issuing refunds and penalties on officials for needless delays would help. 

Why does the government appeal settled issues again and again?

Observers say revenue authorities continue contesting issues already decided by higher courts, adding to the backlog. They want clear guidance from the Centre so similar cases aren’t repeatedly fought.

How can advance ruling systems be made more effective?

Advance rulings are meant to give certainty on tax treatment before transactions happen. But critics say the current setup isn’t delivering timely, binding guidance, especially for cross-border deals. Reform here could stop disputes before they start.

As Finance Minister Nirmala Sitharaman prepares to present the Budget on February 1, voices from industry and tax circles are clear: it’s time to fix the foundations of India’s tax system, not just tinker with rates.