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How do you Respond to a Demand Notice from the Income Tax Department?

Updated on: May 28th, 2024

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3 min read

Once you submit the Income Tax Returns, the next and final step of the e-filing process is verification. The Income Tax Department (IT Department) checks the income declarations and tax paid to see if all these details match. 

If the taxes paid are found to be less than what you owe, they will issue you a demand notice. Let us understand how to respond to such a demand notice from the IT Department.

How to Respond to a Demand Notice from the IT Department

Your jurisdictional Income Tax Officer (ITO) will upload the Demand Notice online. You can access the content of this notice by logging into your e-filing account on the website www.incometax.gov.in, where you can record your responses.

Step-by-Step Guide to Respond to a Demand Notice

Step 1: Log in to your e-filing account on  www.incometax.gov.in  with your user ID and password.

login to e-filing portal

Step 2: On your Dashboard, click ‘Pending Actions’ > ‘Response to Outstanding Demand’ to view a list of your outstanding demands.

Response to outstanding demand

 Note - If you want to make the payment, click ‘Pay Now’ on the same page, which will redirect you to the e-pay tax page. 

demand notice

Step 3On the ‘Response to Outstanding Amount’ page, click ‘Submit Response’ to submit a response.

Response to outstanding

What are the Options to Respond to the Demand Notice?

A. Submit a Response if the demand is correct and you have not paid it. 

Step 1: Select ‘Demand is correct' on the ‘Response to Outstanding Amount’ page. Once you select the response as Demand is correct, you cannot go back and disagree with the demand. 

demand is correct and not yet paid

Step 2: On the same page, select ‘Not Paid Yet’ and click ‘Pay now’. You will be led to the e-pay tax page to make the payment.

Note- A success message and the transaction ID will appear on successful payment. 

transaction success

B. Submit a Response if the demand is correct and you have paid it already. 

Step 1: On the ‘Response to Outstanding Amount’ page, select the ‘Demand is correct’ 

demand is correct response to outstanding

Step 2: Select ‘Yes, already paid, and Challan has CIN’. Click on ‘Add Challan Details’. 

yes already paid

Step 3: To add the challan details, select Type of Payment (minor head), enter Challan Amount, BSR Code, Serial Number and select Date of Payment. Click ‘Attachment’ to upload the challan (PDF) copy and click ‘Save’. 

E-filing portal add challan details

Note- The maximum size of a single attachment should be 5MB. If you have multiple documents to upload, zip them into a folder, and the size should be 50 MB.

Step 4: After entering all the Challan Details, click on ‘Submit’ the response.

submit challan details

On successful payment, a success message with the transaction ID. 

transaction successful

C. Submit a Response if you Disagree with the demand (In full or in part).  

Step 1: Select the ‘Disagree with the Demand (in full or in part)’ option on the ‘Response to Outstanding Amount’ page. Click on ‘Add Reasons’

Disagree with the demand

Step 2: Select the reason(s) for your disagreement from the options and click ‘Apply’.

response on demand
apply reasons

Step 3: Click on the disagreement reason you have added in Step 2 and fill out the appropriate details. Completed status will be displayed against the reasons and click on ‘Submit’. 

reason to disagree on outstanding demand

Step 4: After submitting details for all the reasons listed in Step 2, click ‘Pay Now’ to pay the remaining amount available in the payment summary if you partially disagree. 

Pay now

Note- You will be taken to the e-pay tax page to make the payment.

Step 5: After payment, you will be taken to the ‘Response to Outstanding Amount’ page. Click on ‘Submit’ to submit your responses. 

e-pay tax page

Step 6: Click ‘Confirm’ to submit your response.

submitting form

On successful submission, the transaction ID is displayed.

response to outstanding demand

How do you View Submitted Responses (for those other than taxpayers)?

Step 1: Log in to the e-filing portal using a valid user ID and password.

login e-filing portal

Step 2: Click ‘Services’ > ‘Response to Outstanding Demand’ on your Dashboard.

Step 3: On the ‘Response to Outstanding Demand’ page, enter the PAN of the assessee (client) and search. You can search based on the Assessment year as well. 

Enter PAN Number

Step 4: After the responses have been submitted by the assessee whose PAN has been entered in the previous step. Click on ‘View’ on the notice to view the response offered.

View submitted response

Step 5: The response to the outstanding amount will be displayed. Click on ‘OK’ to come back to the previous page. 

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Frequently Asked Questions

What is an IT notice?

An Income tax notice is an official notification by the Income Tax Department. There is no reason to worry if the individual reads the notice carefully and corrects the defects mentioned.

What is the time limit for demand notice?

The Income Tax Act grants you 30 days from the date of notice to pay the outstanding amount. In exceptional cases, the assessing officer, with the prior approval of the Joint Commissioner, can reduce or extend the period or allow payment by installment.

What is the penalty on demand notice?

The Assessing Officer can impose the amount demanded in the demand notice while providing the assessee a chance of being heard.

Will the refund be adjusted to outstanding demand?

If no action is taken until the date mentioned to respond on demand then the outstanding demand will be adjusted against the refund.

Can I not pay income tax notices?

No, you would have to pay criminal charges, fines and penalty if you do not respond to the income tax notice.

Can i file a revised return after receiving a demand notice?

Under 139(5) of the Income tax Act, 1961 you can file a revised return if you face any dicrepancy in the return that you have filed.

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Quick Summary

After filing Income Tax Returns, verification is essential. If owed taxes are not paid fully, IT Department may issue demand notices requiring responses. Responses include confirming, paying if not paid, providing proof of prior payment, or disagreeing and explaining reasons with feasible payment solutions. To view submitted responses for others, login and search by PAN and Assessment year.

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