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How to Respond to a Demand Notice from Income Tax Department?

Updated on: Sep 25th, 2023

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6 min read

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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. Only then will the IT Department accept the tax return filed per Section 143(1).

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 IT Department.

How to Respond to a Demand Notice from 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.incometaxindiaefiling.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.incometaxindiaefiling.gov.in with your user ID and password.

Step 2: Click on ‘E-file’ and go to ‘Respond to Outstanding Tax Demand’.

You will see the following details displayed-

  • Assessment year
  • Section code
  • Demand notification number
  • Date on which demand is raised
  • Outstanding demand amount
  • Uploaded by
  • Rectification rights
  • Response – submit and view

Step 3: Click on ‘Submit’ for the relevant assessment year. Choose one of the options mentioned below-

  • Demand is correct
  • Demand is partially correct
  • Disagree with demand

What are the options to respond to Demand Notice

Option 1 – Demand is correct

Step 1: When you select this option, a pop-up screen appears with the message ‘If you confirm, demand is correct then you can’t disagree with the demand’.

Step 2: Click on the ‘Submit’ button.

Step 3: A success message will be displayed.

Step 4: If a refund is due, the outstanding amount and the interest will be adjusted against the refund due. Otherwise, you must pay the demand immediately.  
Read about how to pay your tax demand

Option 2 – Demand is partially correct

Step 1: You will see two fields to enter a correct and incorrect amount.

Step 2: Once you enter the amount in the fields, you must choose a reason for stating the department’s calculation to be partially correct.

  • Demand has already been paid: Provide the Challan Identification Number (CIN). Also mention the BSR code, date of payment, the serial number of challan and amount. You can also add your comments under ‘remarks.’ If CIN is unavailable, mention that the demand has been paid by challan and CIN is unavailable. Also, mention the date of payment, amount, and remarks (your comments), if any.
  • Demand has already been reduced by rectification/revision – Provide the date of order, demand amount, and details of jurisdictional ITO who has rectified. Next, upload the rectification/appeal effect order passed by the ITO.
  • Demand has already been reduced by appellate order but appeal effect has to be given by the department – Provide the date of order and the appellate order passed by (details of appellate authority, and the reference number of order).
  • Appeal has been filed and stay petition has been filed, or stay has been granted by, or instalment has been granted by – Provide the date of filing of the appeal, appeal pending with appellate authority e.g., CIT(A) or ITAT, stay petition filed with details of the office. If the stay has been granted, you must also upload a copy of the stay order.
  • Rectification/revised return has been filed at CPC – In addition, please furnish the following details.
    • Filing type
    • E-filed acknowledgement number
    • Remarks (comments, if any of the taxpayer)
    • Upload challan copy
    • Upload the TDS certificate
    • Upload letter requesting rectification copy
    • Upload indemnity bond
  • Rectification has been filed with the assessing officer – Mention the date of application and remarks (comments, if any of the taxpayer).

Option 3 – Disagree with the Demand

Step 1: Upon choosing this option, you must provide details of why you disagree with the department’s call.

Step 2: You must also provide reasons for your disagreement from the available options.

Step 3: Submit your response to view a success screen with a transaction ID.

Step 4: You can revisit the response when you click on ‘View’ under the ‘Response’ tab.

Step 5: You can view the serial number, transaction ID, date of response, and response type will be displayed.

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