Did you Receive Intimation under section 245 of the Income Tax Act?

The mere mention of ‘Intimation from IT department’ may sound stressful, especially if you are getting it for the first time. Worry not, we will tell you all about this intimation u/s 245 of the Income Tax Act. And what is more, you will also understand how to deal with it from the comfort of your home!

Why did I receive intimation under Section 245?

This intimation is received when you have a tax demand pending from the IT department or when you have claimed a refund from them for some other assessment year. Section 245 of the Income Tax Act empowers the assessing officer (AO) to adjust the refund (or a part of the refund) against any tax demand that is outstanding from the taxpayer. In simple words, the IT department wants to adjust the refund due against a demand due from you. This demand may pertain to an earlier assessment year.

How to access details of outstanding tax demand?

The details of your outstanding demand can be viewed on the Income Tax e-Filing portal.

• Login to the Income Tax e-Filing portal with user name and password.

• Click the ‘Pending Actions’ tab and select the ‘Response to Outstanding Demand’ option.

• The details of notice under Section 245 will be displayed.

Understanding the tax demand under Section 245

In case you are not sure how this demand has been calculated and whether you should pay for it or get it adjusted as per the intimation, do not worry! It is possible that there has been a genuine error or it may be that your demand has been incorrectly calculated. Our experts can review the return for the year for which demand has been raised and help you respond to it.

Consequences of not responding to intimation under Section 245

You must submit a response to the intimation under Section 245 within 30 days of receiving it. When you do not respond to the intimation within 30 days, outstanding demand will be considered for adjustment against your refund after considering interest on demand. The interest is chargeable on principal demand pending the relevant assessment year. Thus, the interest demand will be adjusted against the refund without confirmation of the assessee.

Responding to intimation under Section 245

When you receive an intimation under Section 245, go through its details and the time provided to respond back to this intimation. The outstanding demand will be considered for adjustment against your refund if you miss the deadline to respond to the intimation. There are two responses you can give to the intimation: Demand is correct and  Disagree with demand (either in full or in part).

Following is the process to respond to the intimation:

Demand is correct:

When you agree with the outstanding demand, you must log in the Income Tax e-Filing portal and enter the response that the demand is correct. Following is the process:

• Login to the Income Tax e-Filing portal with user name and password.

• Click the ‘Pending Actions’ tab and select the ‘Response to Outstanding Demand’ option.

• Click the ‘Submit Response’ button.

• Select the ‘Demand is Correct’ option and click the ‘Submit’ button.

If the refund is due, the outstanding amount and the interest will be adjusted against the refund due. Otherwise, you must pay the demand amount immediately.

Disagree with Demand (Either in Full or in Part):

When you do not agree with the outstanding tax demand, you must log in the Income Tax e-Filing portal and enter the response that you disagree with the demand (either in full or part). In such a case, you will have to provide reasons for your response. Following is the process:

• Login to the Income Tax e-Filing portal with user name and password.

• Click the ‘Pending Actions’ tab and select the ‘Response to Outstanding Demand’ option.

• Click the ‘Submit Response’ button.

• Select the ‘Disagree with demand (Either in full or part)’ option and click ‘Add Reasons’.

• Select the option and click the ‘Apply’ button. You can select more than one option.

• Enter the appropriate details for each reason that you selected and click the ‘Submit’ button.

After submission of your reason, it is up to the income tax department whether it agrees to your reason or not.

Reach out to us support@cleartax.in in case you have received an intimation under section 245 and need help to respond to it.    

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