By S&S Co. Advocates & Solicitors · Published 16 September 2026 · Informational content, not legal advice: see our disclaimer
Why a Stay Matters
Filing an appeal against a tax demand does not, by itself, suspend the department's ability to recover the disputed amount. Both the income tax and GST regimes therefore provide a mechanism for a taxpayer to seek a stay of recovery, usually conditional on payment of a specified percentage of the disputed demand, while the appeal is pending before the first appellate authority or beyond.
The Standard Position Under Income Tax
Under the income tax framework, an assessee who has filed an appeal before the Commissioner (Appeals) can apply for a stay of the balance demand, and administrative instructions from the CBDT have generally set a standard requirement of paying 20% of the disputed demand as a condition for staying the remainder, pending disposal of the first appeal. This 20% figure is an administrative benchmark, not a rigid statutory cap, and assessing officers retain discretion to require a different percentage depending on the facts, including the strength of the case and the assessee's financial position.
Departing From the Standard 20% Under Income Tax
Where a taxpayer can show a strong prima facie case, for instance, the addition is squarely covered by a decision in the taxpayer's own favour for an earlier year, or by binding appellate or High Court precedent, administrative guidance permits a stay on payment of a lower percentage, or with modified conditions. Conversely, a weak case or a history of recovery risk can justify requiring a higher percentage or additional security than the standard 20%.
The Position Under GST
Under GST, filing an appeal before the appellate authority under Section 107, or before the GST Appellate Tribunal under Section 112, itself operates to stay recovery of the disputed balance, conditional on payment of the mandatory pre-deposit: 10% of the disputed tax amount for a first appeal, and a further defined percentage for a tribunal appeal, subject to caps. Unlike the income tax position, this stay is largely automatic upon payment of the statutory pre-deposit and filing of the appeal, without needing a separate discretionary stay application in the ordinary course.
Practical Steps for Seeking a Stay
Under income tax, a stay application should be filed promptly after the appeal, clearly setting out the prima facie strength of the grounds and any binding precedent in the taxpayer's favour, and should be pursued up the hierarchy, first to the Assessing Officer, then the jurisdictional Principal Commissioner or Commissioner, and if necessary by writ petition, if an unreasonably high percentage is demanded without regard to the case's merits. Under GST, ensuring the statutory pre-deposit is correctly computed and paid at the time of filing the appeal is generally sufficient to secure the stay without a separate application.
Frequently Asked Questions
Is 20% always the amount I must pay to get a stay under income tax?
No: 20% is the standard administrative benchmark, but it can be reduced where the taxpayer shows a strong prima facie case supported by binding precedent, or increased where the case is weak or there is a recovery risk; it is not a fixed statutory percentage.
Do I need to file a separate stay application under GST, or does filing the appeal itself stay recovery?
Filing a GST appeal along with payment of the mandatory statutory pre-deposit (generally 10% for a first appeal) itself operates to stay recovery of the balance disputed amount, without ordinarily requiring a separate discretionary stay application.
What can I do if the tax officer refuses a stay or demands more than the standard percentage without reasons?
This can be challenged administratively before the jurisdictional Principal Commissioner or Commissioner, and, if that does not resolve it, by way of writ petition, particularly where the officer has not engaged with the taxpayer's prima facie case or applicable precedent.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Income Tax Act, 1961: Section 220(6), and CBDT Office Memoranda on stay of demand.
- Central Goods and Services Tax Act, 2017: Sections 107(6)-(7) and 112(8)-(9).