Dispute Resolution Committee for Small Taxpayers: Eligibility, Form 119 and Process (Income Tax Act 2025)

The Dispute Resolution Committee (DRC) under section 379 of the Income-tax Act, 2025 lets a small taxpayer settle a dispute over an assessment variation without going through appeals. It is open where the variations in the order add up to no more than Rs 10 lakh and, if a return was filed, the returned income is no more than Rs 50 lakh. The application goes in Form No. 119 with a fee of Rs 1,000 (rule 197).

The Committee can modify the variations, reduce or waive penalty, and even grant immunity from prosecution. This guide covers who qualifies, which orders count, how the Committee is built, what it can grant, and what the Assessing Officer must do afterwards. Every figure comes from section 379 and rules 196 to 199 of the Income-tax Rules, 2026, as amended by the Finance Act, 2026. Last reviewed against that text on 10 November 2026.

What is the Dispute Resolution Committee under section 379?

Section 379(1) says the Central Government constitutes one or more Dispute Resolution Committees. A person who opts for dispute resolution under this Chapter, in respect of a dispute arising from a variation in a "specified order", and who meets the "specified conditions", can approach it. The Board specifies the persons or classes of persons who may do so.

It sits in the part of the Act headed "Alternate Dispute Resolutions". It is a separate route from the Dispute Resolution Panel route, which is covered in our post on the Dispute Resolution Panel.

Who can apply to the Dispute Resolution Committee?

Section 379(4) sets the financial and procedural limits for a "specified order". Rule 199(b) then adds the "specified conditions" about the applicant's background.

Test	Requirement	Source
Size of variation	Aggregate variations proposed or made in the order do not exceed Rs 10 lakh	Section 379(4)(i)
Source of the order	Not based on a search under section 247, a requisition under section 248 (in the case of the assessee or any other person), a survey under section 253, or information received under an agreement referred to in section 159(1) or (2)	Section 379(4)(ii)
Returned income	If a return was filed for the tax year of the order, total income as per that return does not exceed Rs 50 lakh	Section 379(4)(iii)
Applicant's record	Must meet the "specified conditions" (see below)	Rule 199(b), (c)

Which orders count as a "specified order"?

Section 379(4) leaves it to the Board to specify the orders. Rule 199(a) lists them for the purposes of rules 196 to 198:

• a draft order referred to in section 275(1);
• an intimation under section 270(1) or section 399(1), where the assessee, deductor or collector objects to the adjustments made;
• an order of assessment or reassessment, except an order passed on the directions of the Dispute Resolution Panel;
• an order under section 287 that enhances the assessment or reduces the loss;
• an order under section 398, provided the variations do not exceed Rs 10 lakh (counted as the amount on which tax was not deducted or collected), the return was filed with total income not above Rs 50 lakh, and the order is not based on a search, requisition, survey or section 159 agreement information.

Rule 199 spells out the Rs 10 lakh and Rs 50 lakh conditions for the section 398 item, while section 379(4) states them for every specified order. Read both together and confirm against the Board's specification before you file.

What are the "specified conditions" about the applicant?

Rule 199(b) screens out applicants with certain serious records. In plain terms, the applicant must not be:

• a person under a COFEPOSA detention order, unless that order has been revoked or set aside as the rule describes;
• a person convicted of an offence under the Bharatiya Nyaya Sanhita, 2023, the Unlawful Activities (Prevention) Act, 1967, the NDPS Act, 1985, the Prohibition of Benami Transactions Act, 1988, the Prevention of Corruption Act, 1988 or the Prevention of Money-laundering Act, 2002;
• a person against whom an income-tax authority has initiated prosecution for an offence under the Act or the Bharatiya Nyaya Sanhita, 2023, or for enforcing a civil liability, or who has been convicted following such prosecution;
• a person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992; or
• a person against whom proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 have been initiated for the tax year in dispute.

Rule 199(c) calls a person who meets these conditions a "specified person" for section 379. This is a different meaning from the "specified person" used in TDS provisions.

Am I eligible? A quick decision path

How is the Committee constituted?

Rule 196 sets out the structure:

• One Committee for every region of a Principal Chief Commissioner of Income-tax (rule 196(1)).
• Three members: two retired IRS (Income-tax) officers who held the post of Commissioner or an equivalent or higher post for five years or more, and one ex-officio member not below the rank of Principal Commissioner or Commissioner, as the Board specifies (rule 196(2)).
• Members are appointed for three years (rule 196(3)).
• The two retired members get a per-case fee plus a sitting fee (rule 196(4)).
• Decisions are by majority (rule 196(5)).
• The Government can remove a member for reasons recorded in writing, after a reasonable opportunity of being heard (rule 196(6)).

What can the Committee actually give you?

Under section 379(2), for a person whose dispute is resolved, the Committee may:

• modify the variations in the specified order;
• reduce or waive any penalty imposed or imposable (the words "imposed or" were added by the Finance Act, 2026, w.e.f. 1 April 2026); and
• grant immunity from prosecution for any offence punishable under the Act.

Rule 198(1) attaches two requirements for the penalty relief and immunity. The Committee must be satisfied that the applicant has paid the tax due on the returned income in full and has co-operated with the Committee. It records reasons in writing and may impose conditions.

Relief	Condition	Source
Modify variations	Subject to prescribed conditions	Section 379(2)
Reduce or waive penalty	Tax on returned income paid in full; co-operation	Section 379(2), rule 198(1)
Immunity from prosecution	Same two conditions; not available if prosecution was initiated before the date the application was received	Rule 198(1), (2)
Relief withdrawn	If any condition of the relief is breached, the Act applies as if the relief was never granted	Rule 198(3)

How do you apply, and what does it cost?

The application is made in Form No. 119 by the person opting for dispute resolution (rule 197(1)). It must be accompanied by a fee of Rs 1,000 (rule 197(2)). Rule 198 refers to the e-Dispute Resolution Scheme, 2022 for the intimation and application steps. Those procedural paragraphs are not reproduced in the Act or Rules files used for this guide, so read the Scheme itself for timelines and the portal steps.

What does the Assessing Officer do after the Committee decides?

Section 379(3) applies irrespective of section 275. On receiving the Committee's order, the Assessing Officer must act within one month from the end of the month in which the order is received:

• if the specified order was a draft of the proposed assessment order under section 275(1), pass the order of assessment, reassessment or recomputation; or
• in any other case, modify the existing order of assessment, reassessment or recomputation,

in conformity with the Committee's directions.

Worked examples: do these orders qualify?

Example 1: within the limits (tax year 2026-27 return, assumed figures). Meena, a consultant, filed her return showing total income of Rs 42,00,000. The Assessing Officer's order adds Rs 4,50,000 for an unexplained credit and Rs 3,25,000 for a disallowed expense. Assume no search, survey or section 159 information is involved.

Step	Calculation	Result
1. Aggregate variations	Rs 4,50,000 + Rs 3,25,000	Rs 7,75,000
2. Compare with Rs 10 lakh cap	Rs 7,75,000 is below Rs 10,00,000	Passes
3. Compare returned income with Rs 50 lakh cap	Rs 42,00,000 is below Rs 50,00,000	Passes
4. Source of order	Regular assessment, no search or survey	Passes

Meena meets the financial tests. If she also meets the rule 199(b) conditions, she can file Form 119 with Rs 1,000.

Example 2: over the limit (assumed figures). Ravi filed a return showing total income of Rs 38,00,000. The order proposes variations of Rs 6,80,000 and Rs 4,20,000.

Step	Calculation	Result
1. Aggregate variations	Rs 6,80,000 + Rs 4,20,000	Rs 11,00,000
2. Compare with Rs 10 lakh cap	Rs 11,00,000 is above Rs 10,00,000	Fails

Ravi's order does not qualify under section 379(4)(i), whatever his income. He would look at other remedies.

Example 3: time to give effect. Suppose the Committee's order reaches the Assessing Officer on 12 March 2027. The month of receipt ends on 31 March 2027, and one month from then is 30 April 2027. The officer must pass or modify the assessment order by that date.

Real-life scenarios

A small deductor with a section 398 order. Anil runs a trading firm. An order under section 398 says tax should have been deducted on Rs 6,00,000 of payments. His return for that tax year showed total income of Rs 30,00,000, and there was no search or survey. Both numeric limits are met, so Anil can consider Form 119 if he also meets the rule 199(b) conditions.

A case built on a survey. Sunita's order was passed on the strength of a survey under section 253. Even if the variation is only Rs 2,00,000 and her income is Rs 20,00,000, section 379(4)(ii) excludes the order. The DRC is not available to her.

Prosecution already started. Karan wants penalty relief and immunity. Prosecution for the offence was initiated before his application was received. Under rule 198(2) the Committee cannot grant immunity. He should also check rule 199(b)(C), because prosecution initiated by an income-tax authority can itself stop him meeting the specified conditions, in which case he cannot apply at all.

Common mistakes

• Counting only one addition. The Rs 10 lakh limit is on the aggregate of variations proposed or made, not on each addition.
• Ignoring the source of the order. An order based on a search, requisition, survey or section 159 agreement information is outside section 379(4)(ii), whatever the amount.
• Assuming immunity is automatic. Relief needs full payment of tax on the returned income and co-operation (rule 198(1)).
• Forgetting the relief can be withdrawn. Breaking a condition of the relief restores the original position (rule 198(3)).
• Mixing up the two bodies. The Dispute Resolution Committee and the Dispute Resolution Panel are different routes with different rules.

Quick reference

Item	Detail
Variation cap	Rs 10 lakh aggregate
Returned income cap	Rs 50 lakh
Form and fee	Form No. 119, Rs 1,000
Committee size	3 members, 3-year term, decision by majority
Assessing Officer's deadline	One month from the end of the month the Committee's order is received

Where this is in the Act

• Section 379(1): constitution of Committees and who may opt.
• Section 379(2): modification of variations, penalty reduction or waiver, immunity.
• Section 379(3): Assessing Officer's follow-up order.
• Section 379(4): meaning of "specified order".
• Rule 196: constitution and working of the Committee.
• Rule 197: Form No. 119 and the Rs 1,000 fee.
• Rule 198: penalty reduction or waiver and immunity.
• Rule 199: definitions of specified order, specified conditions and specified person.

For a CA firm, the practical work is spotting which client orders fall under the Rs 10 lakh and Rs 50 lakh limits and tracking the dates that follow. Finexo's practice management software helps you keep notices, orders and due dates across your client book in one place. It does not file applications for you.

This article is general information on the law, not tax advice for your case.