The Income Tax Department is set to intensify tax recovery efforts in FY27, with the Central Board of Direct Taxes (CBDT) directing field officers to prioritise collection of nearly ₹2.57 lakh crore in tax demands that have already been fully upheld by Commissioners of Income Tax (Appeals), according to internal directives shared by sources to CNBC-TV18.
The amount pertains to demands fully confirmed by CIT(Appeals) during FY26, with the CBDT instructing assessing officers to make “all possible efforts” to recover outstanding dues, except in cases where higher appellate forums have granted a stay, sources added.
The move signals a sharper shift in the tax department’s strategy toward actual revenue realisation and faster recovery of locked-up tax arrears amid continued pressure to maintain strong direct tax collections.
According to sources who shared the internal action plan “the CBDT has asked all Jurisdictional Assessing Officers (JAOs), Central Assessing Officers, International Taxation officers and TDS officers to focus specifically on collection of confirmed demands.”
CBDT orders special teams for top arrear cases
In a significant escalation of recovery efforts, “the CBDT has directed Principal Chief Commissioners of Income Tax (PrCCITs) to constitute special teams to assist assessing officers and Tax Recovery Officers (TROs) in handling the “Top 10,000” arrear demand entries under each PrCCIT region,” sources added.
Sources further added, “the directive states that field formations must place “special emphasis” on collecting both arrear and current demand, including initiating suitable measures in cases involving non-compliant taxpayers.”
“Senior officers have also been instructed to closely monitor Dossier Reports, while Range Heads will be responsible for ensuring coordination between assessing officers and TROs for recovery proceedings,” sources shared.
The CBDT has further directed officers to improve classification of outstanding demand to accurately identify “collectible demand” entries and sustain recovery efforts.
For this exercise, field officers have been asked to use the CRESAI portal in accordance with a CBDT Office Memorandum dated January 29, 2025, sources shared while quoting the directions.
Data-driven compliance push
The internal directives further indicated a wider move toward data-backed tax administration and compliance monitoring, said sources.
The CBDT has instructed regional tax authorities and the Directorate of Tax Research and Analysis to undertake district-level and sectoral profiling to identify, firstly, areas generating net positive or negative revenue, secondly, sectors witnessing weak tax payment trends, thirdly, negative advance tax growth patterns, and incorrect claims of exemptions and deductions.
In cases where districts are showing “negative revenue”, officers have been asked to identify underlying reasons and take corrective action, shared sources.
The department has also ordered close monitoring of top advance tax-payers and asked officers to encourage taxpayers to reassess advance tax liabilities during the year itself in order to avoid large self-assessment tax outgo later, sources added.
Focus on undisputed demand, inter-department coordination
Apart from disputed arrears, the CBDT has separately asked officers to identify collectible undisputed demand entries and initiate requisite recovery action, including adjustments through Personal Deposit (PD) accounts.
“The action plan also calls for stronger coordination among various departmental verticals, including, jurisdictional assessment units, investigation Directorates, TDS charges, and other specialised formations,” sources shared.
This suggests the department is attempting to create a more integrated enforcement mechanism by combining taxpayer intelligence across divisions.
CBDT flags “judicious” demand raising
Interestingly, while pushing for stronger recoveries, the CBDT has also advised officers to adopt a “judicious approach” while raising tax demands in order to improve compliance and voluntary payment of taxes, shared sources.
Tax experts say this reflects the department’s recognition that excessively high or unsustainable assessments often inflate disputed demand without translating into actual collections.
India’s outstanding direct tax arrears have historically remained elevated due to prolonged litigation and recovery challenges.
Faster refunds, outreach on new tax regime
The CBDT has simultaneously directed officers to ensure prompt issuance of refunds in order to avoid higher interest payouts by the government.
“The internal note also asks field formations to conduct taxpayer outreach programmes to spread awareness regarding rightful deduction and exemption claims, as well as educate taxpayers on filing updated returns,” sources said.
“According to the directives, these outreach efforts could potentially lead to greater adoption of the new tax regime while reducing misuse of deductions and exemptions available under the old regime,” sources added.
The latest action plan suggests the tax department is entering FY27 with a sharper focus on recoverability, analytics-driven compliance monitoring, and improved cash collections rather than merely increasing headline tax demand figures.
