Finance minister Nirmala Sitharaman on Monday asked the income tax department to withdraw within three months all appeals filed by it before tribunals and courts in which the tax claim falls below the new monetary threshold announced in last year’s budget.
The government had in budget 2024-25 raised the threshold for filing appeals in tax disputes from ₹50 lakh to ₹60 lakh before the Income Tax Appellate Tribunal (ITAT), from ₹1 crore to ₹2 crore in the case of high courts and from ₹2 crore to ₹5 crore in the case of Supreme Court, finance ministry said.
Since then, over 4,600 appeals have already been withdrawn and more than 3,100 cases were not pursued in view of the revised limits, the statement said after Sitharaman’s meeting with tax officials.
Out of the pending 5.77 lakh appeals, over 2.25 lakh appeals are targeted for completion in FY26, resolving over ₹10 trillion of disputed demand, it added.
The minister instructed that all departmental appeals falling below the revised monetary thresholds be identified and withdrawn within three months.
Sitharaman also asked all Principal Chief Commissioners of Income Tax to prioritize and speed up disposal of disputed tax demands that are currently pending before the faceless appellate authorities.
“This is aimed at reducing litigation backlog and ensuring timely resolution, thereby enhancing taxpayer trust in the system,” the statement said.
Mint reported on Monday that Sitharaman will review the performance of the tax administration at a meeting with senior officials in the national capital and discuss ways of cutting down the backlog of tax disputes and of making tax governance more efficient.
The minister also asked senior officials to ensure that tax compliance processes are made simpler, more transparent and taxpayer-friendly, the statement said. The efforts are part of reforming the department’s management of litigation and overall governance. The government is laying emphasis on governance reforms and on further improving ease of doing business as it can help in unlocking the unrealized potential of the economy, which was the theme of Sitharaman’s FY26 Union budget.
The minister’s discussions centred on tax dispute resolution, grievance redressal, refund issuance and regional performance in taxpayer service delivery.
On the taxpayer services front, the Central Board of Direct Taxes reported progress in grievance handling and refunds. As of mid-June, more than 82% of 1.6 lakh grievances filed have been resolved. Also, refunds worth ₹33,872 crore have been issued, marking a 58% growth in refunds over the previous year.
Sitharaman called for greater attention to regional disparities in taxpayer service delivery and urged the adoption of best practices from better-performing zones.
She directed officials to monitor disposal of grievances on its online platforms, identify recurring issues and strengthen redressal mechanisms accordingly.
The minister said the new Income Tax Bill successfully embodies prime minister Narendra Modi’s vision of simplification and clarity in laws. She asked the department to conduct nationwide awareness and capacity-building programmes once the Bill is passed by Parliament.
The finance ministry’s effort is to make tax administration trust-based and compliance-voluntary, while reducing the burden of protracted litigation.
