Which law applies? The Income-tax Act, 2025 replaces the Income-tax Act, 1961 from 1 April 2026. Orders for earlier years are generally still dealt with under the 1961 Act, and the section numbers and forms in this article refer to that Act and its Rules. We confirm which law, section and form apply to your case before we file.

Many taxpayers assume that filing an appeal stops the tax department from collecting the demand. It does not. Unless a stay is granted, the department can continue recovery while the appeal is pending. This guide explains how to ask for a stay.

Where can you ask for a stay?

  • The Assessing Officer. This is usually the first step. You apply for the demand to be kept in abeyance until the appeal is decided.
  • A senior officer of the department. If the Assessing Officer refuses or the terms are unreasonable, departmental guidelines allow you to approach a higher officer.
  • The Tribunal. Once your appeal is before the ITAT, you can apply to it for a stay for a limited period.
  • The High Court. In appropriate cases, for example where an order is clearly unreasonable, a writ petition may be an option.

What does the department usually ask for?

Departmental guidelines have generally asked taxpayers to pay a percentage of the disputed demand, historically 20 percent, as a condition for a stay. The percentage can be higher or lower depending on the facts, for example where the demand is plainly excessive or where the taxpayer has a poor record. Because the guidelines are updated from time to time, we check the current position before advising.

What to include in your application

  1. The order and demand notice, with the date and amount
  2. Proof that you have filed, or will file, the appeal, with the grounds
  3. Why you have a good case on merits
  4. The financial hardship that immediate payment would cause
  5. An offer of part payment or instalments, if you can make one

Points to keep in mind

  • Apply as soon as you receive the demand, not when a recovery notice arrives
  • A stay is discretionary and usually has conditions. If you do not meet them, it can be withdrawn
  • Interest may continue to run on the demand
  • The department can adjust refunds due to you against the demand. You can object to this in writing

Frequently Asked Questions

Does filing an appeal automatically stay the demand?

No. A stay has to be requested and granted. Until then, the department can continue to recover the demand.

Will I have to pay something to get a stay?

Often yes. A part payment of the disputed amount is commonly required. The amount depends on the facts and on the current guidelines.

What if the Assessing Officer rejects my stay application?

You can approach a higher officer, or the Tribunal if the appeal is before it. In suitable cases, the High Court can be approached.

This page is general information and not legal advice. Time limits, forms and fees change, and the law that applies depends on your facts and the year involved. Please contact us so we can check the current position for your case.