How do you respond to a demand notice from the Income Tax Department?

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.

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

 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. 

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

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. 

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. 

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’ 

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

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’. 

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.

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

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’

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

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’. 

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. 

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. 

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

On successful submission, the transaction ID is displayed.

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.

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. 

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.

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