The Income Tax Department has shown a significant improvement in resolving tax disputes, disposing of 2.22 lakh appeals in the financial year 2025-26. This marks a healthy 29% jump compared to the previous fiscal, reflecting the department’s renewed push to reduce pendency and bring greater certainty for taxpayers.
CBDT Chairman Ravi Agrawal, in a letter to senior officials, highlighted the progress and urged teams to continue focusing on data-driven, proportionate, and fair enforcement in the current financial year (2026-27).According to official figures, the department disposed of 2,22,540 appeals in FY26, up from 1,72,361 in FY25 — a growth of 29.11%. Out of the 1.51 lakh legacy appeals that were pending at the start of the year, as many as 50,654 cases were cleared through a special drive. As a result, the carry-forward pendency of old appeals dropped by 33.49% compared to the previous year.
Beyond appeals, the department also resolved 72,933 grievances with an average resolution time of just 47 days. It processed 1,32,125 rectification applications and issued 5,68,621 orders giving effect to various decisions. In total, more than 10.26 lakh cases were disposed of across appeals, rectifications, and grievance redressal, leading to a massive reduction of over Rs 12.33 lakh crore in outstanding tax demand. The department also made progress on the registration front, granting registration or re-registration to about 1.56 lakh trusts, with many shifting from paper-based records to the digital system.
Another positive development was in transfer pricing, where the department signed 219 Advance Pricing Agreements (APAs) during the year — a 25.86% increase from 174 agreements in the previous fiscal. These agreements provide much-needed certainty to multinational companies on how their cross-border transactions will be taxed.
Focus on Data and Fairness
Chair Agrawal indicated that it is essential to have strong information available as well as good intelligence before implementing future strategies rather than applying general policies. He elaborated on how the department has enhanced its ability to analyze data for identifying risk, as well as developing “theme-based” investigations that focus on issues such as improper deduction claims and underreporting of business income. He feels that 2026 is a defining year because of the introduction of the Income Tax Act, 2025 and supporting income tax rules, 2026, are expected to be implemented. It is anticipated that the new act and rules will result in improved compliance while allowing for more modern methods of tax administration that are less intrusive and have a greater reliance on data. Improvements in the appeal process and the reduction of grievances will help to reduce litigation and promote increased confidence between the taxpayer and the tax authority.
