I-T Department Plans to Resolve More Than 2 Lakh Disputes Involving Rs. 10 Lakh Crores at First Appeal Level in FY26:

I-T Dept. Plans to Resolve More Than 2 Lakh Disputes Involving Rs. 10 Lakh Crores at First Appeal Level in FY26

The income tax (I-T) department has aimed to resolve disputes involving more than 2 lakh, with a maximum amount of Rs. 10 lakh crore in the financial year 2025-26 in the first appeal level. This is in contrast to FY25, when over 172,000 cases were settled at the Commissioner of Income Tax (Appeals) level, involving a total disputed amount of around Rs. 6.3 lakh crore. As per the previous years, the department of revenue generally recovers around one-third of the disputed amount soon after these mutual settlements. If the planned number of cases is resolved by the CIT (Appeals) in the current financial year, it could lead to a major increase in tax collections and also free up funds for many businesses. This would help them cover day-to-day expenses and even invest more in growth. This is because, in many cases, the CIT (Appeals) chooses to cancel tax demands that are clearly not recoverable. As of April 1, 2025, the total outstanding income tax dues, including amounts not yet due, stand at around Rs. 48.18 lakh crore across 2.29 crore cases. Considering the growing backlog of tax dues and the need for better cash recovery, the CBDT said in its Central Action Plan for 2025–26 that strong steps are needed to bring down disputed amounts to more manageable levels. For FY26, the department has set a goal to collect over Rs. 5 lakh crore in net recoverable tax and reduce overall tax demand by about Rs. 8.25 lakh crore, according to sources. It’s worth noting that in FY25, appeal disposals increased by 55% compared to the previous year, reaching a record high. A total of 172,361 appeals were resolved at the CIT level, with Rs. 1.95 lakh crore in tax demands fully upheld and another Rs. 2.25 lakh crore partly confirmed. “This shows the government’s focus on reducing the pressure on honest taxpayers and making the tax system more efficient,” said Amit Maheshwari, Tax Partner at AKM Global. The Central Board of Direct Taxes (CBDT) has asked all the assessing officers to make sure all necessary efforts are made to gather excellent demands that have been approved by CIT (Appeals) at the first appeal level. The demand reduction increases with age. The earlier demands are anticipated to be resolved via appeals. Tax demands under insolvency cases or those being corrected are being reviewed. Older demands over five years old are more likely to be written off, while newer demands less than a year old are seen as the most likely to be recovered. Among all the pending appeal cases, those involving amounts up to Rs. 100,000 have been selected to give relief to many small taxpayers, since a large number of appeals fall into this category. For FY26, the government has set a direct tax collection target of Rs. 25.2 lakh crore, which is 13.2% higher than last year’s collections. The CBDT has asked tax officers to study different sectors closely, understand why tax payments or advance tax growth are low in some areas, keep a close watch on top advance tax payers, and check for incorrect exemption or deduction claims.