[Opinion] Budget 2026 Amendments – A Shift from Judicial Views to Legislative Intent

Srinath Kumar & Akshay Jain – [2026] 183 taxmann.com 72 (Article)

Finance Bill 2026 has signalled a watershed moment in Indian fiscal policy, heralding a clear shift from a judiciary-led tax environment to one governed by legislative intent. The government, by strongly employing “notwithstanding” clauses and retrospective clarifications, is seeking to resolve long-standing disputes. As on date about 5.4 lakh appeals are pending before the Commissioner of Income tax, as per statistics till 1 April 2025, involving disputed demands of Rs 18.16 lakh crore1.

A striking feature of the Finance Bill 2026, through the various amendments proposed, is the insertion of the phrase “notwithstanding anything contained in any judgment, order or decree of a court.” This wording signals a clear legislative intent to supersede existing judicial pronouncements and to bring an end to the myriad, often conflicting tax disputes that have accumulated over the years. By explicitly stating that the new provisions will prevail over any court made determinations, the Bill seeks to provide a definitive, uniform resolution to multifaceted tax litigation.

Accurate interpretation of tax legislation is essential to uncover the meaning that legislators intended. When taxpayers and tax authorities arrive at divergent readings of the same provisions, the resulting disputes often precipitate costly and protracted litigation. Ensuring a common, well grounded understanding of the law therefore not only upholds statutory purpose but also helps to reduce unnecessary conflict between the parties involved.

Different readings of the Income Tax Act 1961 have repeatedly given rise to protracted litigation. The following provisions, in particular, have been the focus of extensive judicial scrutiny because of conflicting interpretations by taxpayers and the tax administration:

1. Document Identification Number (DIN) on Tax Orders – Divergent views on whether a DIN is mandatory for every order have led to numerous challenges on the validity of assessments.
2. Authority to Pass a Reassessment Enquiry – The jurisdictional assessing officer (JAO) versus the faceless assessing officer (FAO) debate revolves around who may legitimately conduct an enquiry for reassessment under Section 148A, creating procedural impasses in several high value cases.
3. Time Limit for Issuing the Final Assessment Order After a Dispute Resolution Panel (DRP) Decision – Uncertainty over the period within which the assessing authority must finalize the assessment post DRP (whether the period of nine months granted to DRP should also be included in the computation of the limitation period or it has to be excluded) has resulted in repeated extensions and contested orders.
4. Time Limit for Passing Transfer Pricing Orders – The statutory window for issuing a transfer pricing order under Section 92CA(interpretation on how to calculate period of 60 days of limitation) has been interpreted variably, giving rise to disputes over the applicability of the limitation period.
5. Time Limit for Depositing Employee Contributions to Welfare Funds – Differing opinions on the deadline for crediting employee contributions to statutory welfare schemes (e.g., EPF, ESIC) (whether they can be deposited before the due date of filing income tax returns or whether they need to be deposited before the respective statutory timelines under the respective laws) have triggered litigation.

The recently enacted Income Tax Act 2025 sets a new benchmark for clarity in tax legislation. Recognising that complex legal jargon can deter comprehension and compliance, the Act rewrites key provisions in plain, everyday language thereby promoting greater transparency, confidence, and voluntary compliance across the nation.

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