CBDT Sets Ambitious Targets for Dispute Resolution, Revenue Collection in 2025–26 Action Plan

India’s Central Board of Direct Taxes (CBDT) has issued its Central Action Plan for the financial year 2025–26, laying out an expansive strategy for streamlining tax administration, improving taxpayer services, boosting compliance, and intensifying efforts on revenue collection and dispute resolution. Dated April 30, the newly released roadmap outlines numerous targets for the year, specifically focusing on the resolution of advance pricing agreements (APAs) and the functioning of the dispute resolution panel (DRP), a key mechanism for addressing transfer pricing controversies.

The document articulates the plan's alignment with the broader national vision of ‘Viksit Bharat’ by 2047, the Indian government’s declared ambition to transform the country into a fully developed economy by the 100th anniversary of its independence. With this in mind, the CBDT plan emphasizes the importance of “optimising revenue collection,” and mandates that various arms of the income tax administration move with urgency and precision.

Among the headline measures, the CBDT has set firm deadlines for the DRP to clear its backlog of pending cases as of April 1, 2025. According to the plan, the DRP is instructed to dispose of 30% of these disputes by June 30, 70% by September 30, and 100% by their designated expiry dates. These time-bound directives are designed to enhance the efficiency of India’s alternative dispute resolution mechanism and reduce litigation timelines.

In parallel, APA authorities have also been handed specific quotas. Each Commissioner of Income Tax has been assigned a disposal target of 40 APAs, a figure that includes both unilateral and bilateral agreements. India’s APA programme has drawn praise in recent years from local tax advisers for being “efficient and business-focused,” a sentiment that the CBDT appears eager to build upon through clearly defined performance benchmarks.

In addition to dispute resolution, revenue collection takes center stage in the CBDT’s strategic plan. The Board has outlined what it calls an “ambitious yet realistic” collection target of ₹25.2 trillion (approximately $297 million) in direct taxes for the 2025–26 financial year. To meet this goal, the action plan calls for “systematic and strategic efforts at all levels,” with revenue targets allocated regionally based on the past performance and assessed revenue potential of each zone.

Demand and litigation management are also key pillars of the 2025–26 plan. The CBDT has introduced a score-based framework for reducing outstanding tax arrears. This system weighs two primary factors: the recoverability status as assessed by the tax officer and the age of the tax demand. According to the plan, “higher scores are given to arrears where recovery is more probable,” thereby prioritizing recoverable cases to improve arrears management outcomes.

Another bold directive calls for the disposal of the top 1,500 tax appeals based on the value in dispute. This target has been calibrated according to the current number of active officers but could be raised to 2,000 if vacancies in the department are filled, the CBDT noted.

Taxpayer service delivery has also been identified as a high priority in the plan, which pledges to enhance services “at multiple levels.” The plan emphasizes the need for “resolving grievances received through the centralised public grievance redress and monitoring system within stipulated timelines,” while also committing to “setting clear timelines” for essential tax-related services. These measures are part of a larger initiative aimed at fostering voluntary compliance and building public trust in the tax system.

Overall, the Central Action Plan 2025–26 presents a comprehensive vision for reforming India’s direct tax administration. With firm timelines, region-specific goals, and a focus on modernization, the CBDT appears to be reinforcing its role in supporting the economic aspirations of a developing India on the path to becoming a ‘Viksit Bharat’.

By fLEXI tEAM