Regarding applicability of 20% of outstanding demand

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When appealing an income tax order, the 20% deposit required to obtain a stay on recovery applies to the disputed gross tax liability. This means you generally pay 20% of the tax amount you're contesting, excluding any interest unless the interest itself is part of the dispute. The deposit is calculated on the 'total disputed demand' stated in your appeal form.

Divyesh Ajmera

Divyesh Ajmera (Querist)

07 December 2024 In case of appeal against income tax order, on which amount 20% applicable whether on Gross Tax liability or Net tax liability (Gross Tax liability plus interest adjustments)?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

07 December 2024 According to the Central Board of Direct Taxes (CBDT) circulars, this requirement has evolved over time, with the current standard being a 20% deposit on the disputed tax demand as a condition for obtaining a stay on recovery during the appeal process. When appealing an income tax order, the 20% deposit applies strictly to the disputed gross tax liability and excludes any interest unless that interest itself is part of what is being contested.

Divyesh Ajmera

Divyesh Ajmera (Querist)

07 December 2024 In nutshell, we need to pay 20% of "total disputed demand" we mentioned in form 35?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

08 December 2024 Correct.

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