I have appealed. Do I have to pay 20% of the demand to get a stay?

Stay of demand while a first appeal is pending is granted by the Assessing Officer under section 220(6) of the Income-tax Act, 1961 (now section 411(12) of the Income-tax Act, 2025). The CBDT guidelines issued under the 1961 Act continue to apply under the 2025 Act.

What the guidelines say

• If you have appealed to the Commissioner (Appeals), the officer should grant a stay on payment of 20% of the disputed demand, until the appeal is decided.
• The officer can ask for more than 20%, for example where the addition was confirmed in an earlier year, or accept less, for example where the addition is against a court or Tribunal decision, or is a clear mistake. A higher authority (the Principal Commissioner) can review the officer's decision.
• Budget 2026 announced that the standard payment would be cut to 10%, calculated only on the core tax (not interest or penalty). This is an administrative change. Before you pay, check whether CBDT has issued the revised instruction, and if it has, ask for the 10% figure.
• High Courts have repeatedly held that the 20% figure is not a fixed condition: the officer must consider the merits of the appeal, any obvious errors in the order, and financial hardship.

How to apply for stay

1. File the appeal first (Form 35, now Form 99). See how to appeal.
2. Respond to the demand on the portal as "disagree", stating that an appeal has been filed. See outstanding demand.
3. Apply in writing to the Assessing Officer for stay, with the appeal acknowledgement, a short note on why the addition is wrong, and any hardship.
4. Pay the amount agreed (20%, or the lower figure if granted), and keep the challan.
5. If the officer refuses or asks for too much, apply to the Principal Commissioner, and in clear cases to the High Court.

Stay before the Tribunal

At the second appeal, the Tribunal can grant stay on payment of at least 20% of the amount (or equal security). Under the 2025 Act the stay lasts up to 180 days, within which the Tribunal must decide the appeal.

If you don't get a stay

The officer can recover the demand, for example by adjusting refunds or attaching bank accounts, and interest of 1% a month runs on unpaid amounts (section 220(2), now section 411(3)). Paying part of the demand reduces the interest.