The Central Board of Direct Taxes (CBDT) is intensifying efforts to recover ₹2.57 lakh crore in confirmed tax demands during FY27, deploying special enforcement teams and technology-driven tools to pursue high-value defaulters, according to reports. The move comes as India's direct tax collections fell short of revised targets in FY26, adding urgency to the recovery drive.

Special Teams to Track Top 10,000 Cases

Under the enforcement initiative, dedicated teams will monitor the top 10,000 high-value arrear cases across the country in FY27, tax department officials said. The recovery push will be backed by artificial intelligence, data analytics, and digital forensics — a significant technology upgrade over previous compliance cycles.

Officials indicated that recovery teams may also tap the CERSAI mortgage and asset database to trace properties and secured assets linked to defaulters. Additionally, the department plans to monitor top advance-tax payers and identify potential misuse of exemptions and deductions.

FY26 Appeals and Pending Demand Clearance

In FY26, the CBDT disposed of 2.24 lakh appeals involving a disputed demand of ₹8.27 lakh crore. Pending appeals declined from 5.40 lakh to 4.95 lakh during the year, reflecting a concerted effort to clear the backlog. Officers have been directed to sharpen focus on recovery from non-compliant taxpayers going forward.

FY26 Collections Miss Target

India's net direct tax collections rose 5.1% year-on-year to ₹23.4 lakh crore in FY26 on a provisional basis, falling short of the Revised Estimate of ₹24.21 lakh crore by approximately ₹81,000 crore. Officials attributed the shortfall to evolving macro-economic conditions that dampened tax buoyancy. The FY27 direct tax collection target has been set at ₹26.97 lakh crore as per Budget 2026.

New Income Tax Act and Simplification Drive

Chief Commissioner of Income Tax (IT & TP) Nirupama Kotru said the newly implemented Income Tax Act 2025 has made India's tax system simpler and more taxpayer-friendly. Speaking on the sidelines of an awareness programme, she said the reforms are aimed at helping ordinary citizens file returns without confusion and reducing dependence on tax professionals for basic compliance. This signals a dual approach — tightening enforcement on defaulters while easing the burden on compliant taxpayers.

What Comes Next

With a ₹26.97 lakh crore direct tax target for FY27 and a ₹81,000 crore shortfall carried over from FY26, the CBDT's recovery drive will be closely watched as a key indicator of the government's fiscal consolidation trajectory. The integration of AI and digital forensics into tax enforcement marks a structural shift in how India pursues large-scale arrears.