Disputed Tax Notice? Your Stay Deposit May Halve
If CBDT acts on a Budget proposal, taxpayers contesting an income tax demand may only need to deposit 10% of the disputed amount — down from 20% — to get a stay on recovery during their appeal.
A ₹5L disputed tax demand once froze a Delhi teacher's savings — she needed ₹1L just to pause collection while appealing.
You may soon need only this much to pause a disputed tax demand
Key Takeaways
Check if you have any outstanding income tax demand notices by logging into incometax.gov.in under 'Pending Actions'.
If you've received a demand you disagree with, file an appeal with CIT(A) and simultaneously request a stay under Section 220(6) — don't wait.
Consult a CA or tax advocate before depositing any amount under protest — get the stay application in writing to prevent coercive recovery action.
If CBDT acts on a Budget proposal, taxpayers contesting an income tax demand may only need to deposit 10% of the disputed amount — down from 20% — to get a stay on recovery during their appeal.
Here's what happened: Industry bodies have urged CBDT to issue a formal Office Memorandum cutting the stay deposit requirement from 20% to 10% of disputed tax demand.. The reduction was proposed in the Union Budget 2026–27, but taxpayers currently still face the older 20% deposit requirement without an official OM.. Under Section 220(6) of the Income Tax Act, a taxpayer can apply for a stay on demand collection during an appeal — but must deposit a portion first..
What you should do: Check if you have any outstanding income tax demand notices by logging into incometax.gov.in under 'Pending Actions'.. If you've received a demand you disagree with, file an appeal with CIT(A) and simultaneously request a stay under Section 220(6) — don't wait.. Consult a CA or tax advocate before depositing any amount under protest — get the stay application in writing to prevent coercive recovery action..
Even before CBDT issues the OM, courts have ruled that 20% is a guideline, not a mandatory rule — a well-drafted stay application citing financial hardship can get you a lower deposit order.
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This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.