Finance Minister Nirmala Sitharaman on Friday urged income tax authorities to step up the pace of adjudication on tax payer appeals, saying that the record 2.24 lakh disposals in FY26 was not enough.
Sitharaman urged the Central Board of Direct Taxes (CBDT) to review its litigation management strategy as pending appeals continue to stand at 5.4 lakh.
Addressing the 167th Income Tax Day celebrations, Sitharaman said that while disposing of 2.24 lakh appeals against 1.79 lakh fresh appeals had helped reduce the pendency, the remaining backlog was still too high.
Sitharaman told officials that the pace of clearing pending appeals has to match the pace of fresh appeals getting filed.
The minister asked the CBDT to hold a review to ensure the backlog does not continue to grow.
Her remarks came after CBDT Chairman Ravi Agrawal highlighted that the department had disposed of over 2.24 lakh appeals during FY26, significantly higher than the 1.79 lakh fresh appeals filed during the year, resulting in a substantial reduction in pending appeals.
He also said that around 6,000 departmental appeals had been withdrawn following the revised monetary thresholds announced in Budget 2024-25.
The Finance Minister underlined that focus should shift from merely managing litigation to preventing disputes through greater tax certainty.
Sitharaman said implementation of the Income Tax Act, 2025 should be accompanied by consistent guidance and continuous engagement with taxpayers, professionals and industry, noting that tax certainty was critical for improving ease of doing business and India’s attractiveness as an investment destination.
On taxpayer services, Agrawal said nearly all verified income-tax returns for Assessment Year 2025-26 had been processed. Out of nearly 8.6 crore verified returns, only around 1.5 lakh remained pending. Of 3.82 crore verified refund cases, just 1.47 lakh were pending, primarily due to ongoing risk assessment. He added that the department had disposed of 5.68 lakh appeal-effect orders out of 6.29 lakh, achieving a 90.3 per cent disposal rate during FY26.
The CBDT chairman also said grievance redressal had improved significantly. The department disposed of 94 per cent of nearly 77,765 CPGRAMS grievances and resolved 95 per cent of over 3.43 lakh e-Nivaran grievances, while also working to identify and eliminate the root causes of recurring complaints. On international taxation, he said CBDT signed 220 Advance Pricing Agreements (APAs) during FY26, taking the cumulative number of APAs to 1,035 by March 2026.
Agrawal also said the department was expanding its digital capabilities, with the virtual assistant Kar Saathi recording 38 lakh hits. The department has also conducted 304 physical outreach programmes, 11 Samvaad sessions on the Income Tax Act, 2025, and 12 sessions on the new income-tax forms.
Revenue Secretary Arvind Shrivastava described the implementation of the Income Tax Act, 2025 as a landmark reform, noting that the new law had reduced the number of sections from 819 to 536, chapters from 47 to 23, rules from 511 to 333, and forms from 399 to 190.
Sitharaman also outlined seven principles for the department going forward – deepening voluntary compliance, simplifying taxpayer experience, strengthening tax certainty, harnessing technology responsibly, building institutional excellence, strengthening public trust and embracing continuous improvement. She also called for specialised training of tax officers in artificial intelligence, data analytics, forensic accounting, international taxation, transfer pricing, digital assets and cybersecurity to prepare the department for emerging challenges.
