FM Sitharaman Asks CBDT to Withdraw These Tax Cases Within 3 Months

In what seems like a much-needed clean-up exercise, Finance Minister Nirmala Sitharaman has asked the Central Board of Direct Taxes (CBDT) to withdraw all departmental tax appeals that fall below the revised monetary limits announced in this year’s Union Budget within a three-month deadline.

With this directive, the finance minister has urged the tax authorities to stop chasing smaller disputes that no longer hold up under the updated thresholds and focus instead on high-value cases that deserve legal bandwidth. Speaking at the 166th Income Tax Day event on July 24, Sitharaman told senior tax officials, “Good policies are not enough in themselves; the real meaning lies in their timely implementation.”

This has set the tone for what’s coming next; following tax appeals will be dropped by the CBDT:

Out of around 5.77 lakh tax appeals that are currently pending with the tax department, around 2.25 lakh fall below the new monetary limits. These are the ones that have been marked for withdrawal, and together these below-value cases involve tax demands that exceed more than Rs 10 lakh crore.

The revised thresholds, which came into effect with Budget 2024-25, are as follows:

• Rs 60 lakh for appeals before the Income Tax Appellate Tribunal (up from Rs 50 lakh)

• Rs 2 crore for High Court cases (up from Rs 1 crore)

• Rs 5 crore for matters before the Supreme Court (up from Rs 2 crore)

Since the changes kicked in, CBDT has already pulled back 4,605 appeals and held back from filing another 3,120 cases that did not meet the new thresholds. This already amounts to thousands of pages of paperwork, and courtroom hours, saved.

The Broader Push

Sitharaman also asked the CBDT to review performance across sectors, speed up dispute resolutions, and try to understand why these disputes crop up in the first place. “Let’s reaffirm that contract. Let’s earn the trust of the taxpayers,” she said.

With the lower-value appeals gone, the idea is to give more time to courts and tax officials to pay attention to complex, high-stake disputes that genuinely require interpretation or legal clarity.

The Finance Minister also took the opportunity to highlight work done on the new Income Tax Bill and called it “spectacular”. The Bill reportedly took 60,000 man-hours to draft, and the document has been trimmed down to nearly half of its original five lakh words. The effort, Sitharaman said, was aimed at removing legal ambiguities and making the law easier to navigate.

What does the withdrawal of low-value tax cases mean for taxpayers?

Whether this clean-up drive will work as intended depends entirely on how quickly and uniformly the directive is implemented. The CBDT now has a three-month window to identify and dispose of these cases, and while progress so far has been encouraging, the bulk of the work lies ahead.

For taxpayers, this could mean fewer notices, less litigation, and, hopefully, more clarity going forward. If implemented properly, this would translate into actual relief for people stuck in the system.