The income-tax department has set an ambitious target to dispose of over 200,000 cases, involving an aggregate disputed amount of Rs 10 lakh crore, lying with the first forum of appeal, in the current financial year.
This compares with over 1,72,000 cases resolved at the Commissioner of Income Tax (Appeals) stage in FY25, where the locked amount was about Rs 6.3 lakh crore.
Going by the trend in recent years, the revenue department manages to lay its hands on roughly a third of the disputed amount, immediately after such mutual resolutions.
If the targetted number of cases are resolved by the CIT (Appeals) in FY26, it would result in not only a big jump in tax receipts, but could also improve the liquidity position of hundreds of businesses, enabling them not only to meet operational costs, but even scale up capital expenditure. This is because the CIT-Appeals in several cases decide to withdraw the demands, especially those in which the amounts are clearly not recoverable.
The income tax arrears, including demand not fallen due as on April 1, 2025 is estimated to be Rs 48.18 lakh crore in 22.9 million demand entries.
Keeping in view the (piling up) of arrears and cash collections, it is imperative that concerted efforts are being made to reverse the trend, and reducing the disputed amounts to “more manageable levels,” the CBDT said in its Central Action Plan 2025-26.
So, it has set “net collectable demand” for FY26 at a little over Rs 5 lakh crore while the reduction in demand to the tune of Rs 8.25 lakh crore, sources said.
It is to be noted that in FY25, the disposal of appeals was 55% more than the previous year and was at an all-time high. In FY25, the number of appeals disposed of at CIT level was 1,72,361, with demands fully confirmed (in favour of revenue department) at Rs 1.95 lakh crore, and another Rs 2.25 lakh crore partly confirmed.
“It reflects the government’s commitment to easing the burden on honest taxpayers and streamlining the tax administration system,” Amit Maheshwari, Tax Partner, AKM Global,
The Central Board of Direct Taxes (CBDT) intimated that the assessing officers must ensure that all possible efforts are made to collect outstanding demands that have been confirmed by CIT(Appeals) in the first appellate stage.
The probability of demand reduction increases with age, as older demands are more likely to be resolved through appeals, insolvency proceedings or rectifications. Demands older than five years have been given the highest reduction probability score, while recently raised demands (less than one year old) have been assigned the highest probability of being collected.
Among all the categories of pending appeals, the category of up to Rs 1,00,000 has been chosen to provide relief to a large number of small taxpayers as it was found that a substantial proportion of pending appeals belong to such category.
The Budget FY26 has set a direct tax target of Rs 25.2 lakh crore, an increase of 13.2% over the collections last year.
The CBDT has told officers to undertake sectoral analysis and address negative trends of tax payments; find out the reasons for negative trends of tax payments or growth of advance tax in such sectors; close monitoring of top advance tax taxpayers and identifying claims of incorrect exemptions and deductions.
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