Income Tax Notices

Section 245 - Intimation u/s 245 of the Income Tax Act

The income tax department sends the intimation notice u/s 245 to take confirmation from your side for offsetting the pending tax to be paid by you for any of the previous years from the current year's refund.

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Updated on: 23 Nov, 2023 01:22 AM

What is Intimation u/s 245?

Intimation u/s 245 is a type of notice/intimation issued by the Income Tax Department to inform you that they are adjusting your previous year’s pending tax payable with the current year’s refund.

Section 245 of the income tax act gives the Income Tax Department power to adjust any previous year’s demand of tax payable with the current year’s refund. But to exercise this power, it’s mandatory on their part to send intimation under section 245 of the income tax act to the taxpayers and allow them to submit their response on it whether they agree with it.

For example, Income Tax Department had raised a demand for tax of Rs 21,000 from Mr. Sharma in the F.Y. 2012-13 after he filed his return. Mr. Sharma did not agree with the demand as the department did not consider his TDS. So, he simply filed for rectification u/s 154 and lived peacefully thereafter.

Then came F.Y. 2016-17; Mr. Sharma, like every year, filed his return, but this time with a refund of Rs 15,000. But instead of getting a refund, he got an intimation from the Income Tax Department u/s 245 stating that his refund of Rs 15,000 was being adjusted with the demand raised by the department in the F.Y. 2012-13. This gave Mr. Sharma the goosebumps of the F.Y. 2012-13 when he struggled with that dreaded demand of Rs 21,000 and, after consulting with professionals, filed a rectification u/s 154. Apparently, Income Tax Department did not agree with the rectification u/s 154 at that time, and the demand still remained.

How to respond to the intimation u/s 245?

Once you receive the Intimation under section 245 of the income tax act, read it in and out and check all the details along with the time mentioned within which you can take any action (generally, it’s 30 days) because if you do not take any action, then the outstanding demand as on that date will be considered for adjustment against your refund.

There are two possibilities, either you agree to the outstanding demand, or you do not.

  1. If you agree with the Outstanding Demand:
    If you agree with the outstanding demand, simply log onto www.incometax.gov.in with your user id and password.
    Go to Pending Actions tab - > Response to outstanding demand - > Submit response - > Demand is correct - > Submit.
    Even if you do not act within the stipulated time, the demand will be automatically adjusted with your refund.
  2. If you do not agree/partially disagree with the Outstanding Demand:
    If you do not agree with the outstanding demand, simply log onto www.incometax.gov.in with your user id and password.
    Go to the 'Pending Actions ' tab - > Response to outstanding demand - > Submit response - > Disagree with demand(Either in full or part) - > Submit.
    In these cases, you’ll also have to submit the reasons for our partial/full disagreement with the demand, like Demand Paid, Demand already reduced by rectification/revision, Appeal has been filed, etc.
    Your work is done; now it's up to the department whether it agrees to your reason or not.

In any case, it’s advisable that you take the advice of a Chartered Accountant before taking any action.

What is the process for checking/verifying details of Outstanding Tax Demand?

Step 1 : Login into your income tax portal with your user id and password.

Login into your income tax portal

Step 2 : Go to the 'Pending Actions ' tab-> Response to outstanding demand

Pending Actions

Step 3 : Given below screen will display, and you can check the details from here.

check the details from here

What is the detailed procedure for filing an online response?

Step 1 : Login into your income tax portal with your user id and password.

What is the detailed procedure for filing an online response

Step 2 : Select the option of Pending Actions -> Response to Outstanding Tax Demand

Select the option of Pending Actions

Step 3 : Click on submit a response

Click on submit response

Step 4 : After submitting, you will be taken to the given below screen, and 2 options will be displayed.

After submit

Option 1: Now, if you click on Demand is correct

If the assessees select “Demand is correct,” a pop-up is displayed below. Click on submit button, and a confirmation message is displayed on the screen for accepting the demand and –
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.

Now if you click on Demand is correct

Option 2: If you Disagree with the demand (Either in full or in Part)

Step 1 : If the assessees select “Disagree with Demand,” Then Click “Add Reasons”.

If you Disagree with the demand

Step 2 : Select from the options and click Apply. (You can select one or more options.)

Select from the options and click Apply

Step 3 : After selecting the appropriate reasons for your disagreement, select each reason you listed in Step 2 on the Response to Outstanding Amount page and enter the appropriate details for each reason.

After selecting the appropriate reasons

Note: Completed status will be displayed against the reason for which you have submitted the details.

What are the consequences of not responding to the notice intimation u/s 245?

If no action is taken within 30 days of this notice u/s 245, the outstanding demand will be considered for adjustment against your refund after considering interest on demand. Interest shall be charged on principal demand pending of relevant assessment year. The interest demand will be adjusted against the refund without any confirmation from the assessee.

How to find Jurisdictional Assessing Officer?

Step 1 : Login into your income tax portal with your user id and password.

How to find Jurisdictional Assessing Officer

Step 2 : Select the My Profile in Profile Icon

Select the My Profile in Profile Icon

Step 3 : Click on Jurisdiction details, and given below screen will appear

Click on Jurisdiction details

How to Respond to the Assessing Officer?

Since the response is being made online, separate compliances in responding to the Assessing Officer are only required if and when specifically asked to do so by the Income Tax Department.

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Frequently Asked Questions

By submitting the online response, taxpayers need to agree with the demand raised by the department, and then the department will adjust the demand raised and issue an intimation u/s 245.
No, Section 245N(a) is applicable to non-residents.It is only applicable to a certain category of residents (including public sector units)
If the notice is sent by Assessing Officer and has yet to respond in time, the assessee can be penalized.
To see the response to the outstanding demand page, you need to log in to the e-Filing portal and select Pending Actions > Response to Outstanding Demand. This page will show you the current status of any past or existing demands that are not yet paid or responded to against your PAN. The status will be either Pending payment or Pending response.
If you find a mistake in your original ITR or get a notice from the income tax department for any errors, you can file a Revised Return to correct them. And you have to e-verify the Revised ITR within 30 days of filing.
A revised return can only be filed if the original one is filed on or before the due date. I.e., belated Income Tax Returns cannot be revised.
You need to verify your Income Tax Returns within 30 days of filing. If you have filed the original ITR without verifying it and you need to make some rectifications, you can do so by following these steps:
First, verify the original ITR using any of the available methods.
Then, file the revised ITR with the necessary changes and verify it as well.
CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.