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What exactly is Intimation u/s 245?

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

Section 245 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 u/s 245 to the tax payers and give them opportunity to submit their response on it whether they agree with it or not.

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 for it 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 refund, he got an intimation from the Income Tax Department u/s 245 stating that his refund of Rs 15,000 is 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 had 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.

Okay, so you’ve received the Intimation u/s 245, now what shall be done?

Once you receive the Intimation u/s 245, 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.

Now, 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, then simply log onto www.incometaxindiaefiling.gov.in with your user id and password.
    Go to 'e-file' tab - > Response to outstanding demand - > Submit response - > Demand is correct - > Submit.
    Even if you do not take any action within the stipulated time, then 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, then simply log onto www.incometaxindiaefiling.gov.in with your user id and password.
    Go to 'e-file' tab - > Response to outstanding demand - > Submit response - > Demand is partially correct/Disagree with demand - > Submit.
    In these cases, you’ll have to also submit the reasons for our partial/full disagreement with the demand like Demand Paid, Demand already reduced by rectification/revision, Appeal has been filed, others etc.
    Your work is done, now its upto the department that 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 e-filing portal with your user id and password.
income tax e-filing
Step 2 : Step 2 :Go to 'e-file' tab-> Response to outstanding demand
Go to 'e-file'
Step 3 : Given below screen will display and you can check the details from here.
Given below screen will display

What is the detail procedure to file online response ?

Step 1 : Login into your income tax e-filing portal with your user id and password.
income tax e-filing portal
Step 2 : Select the option of E-file -> Response to Outstanding Tax Demand
Select the option of E-file
Step 3 : Click on submit response
Click on submit response
Step 4 : After submit, you will be taken to given below screen and 4 options will be displayed.
After submit

Option 1 : Now if you click on Demand is correct

If assessees selects “Demand is correct”, then a pop up is displayed as given 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.

Demand is correct


Option 2 : Demand is partially correct

If assessees selects “Demand is partially correct” then below screen will be displayed Demand is partially correct

Now enter the amount which is correct, then click on submit and given below screen will be displayed along with incorrect amount which will be auto populated submit and given below screen

Now assessee has to select any reason of disagreement, based on reason selected, assessee needs to provide additional information as below:-

  • Demand has already been paid: If you select this option then provide the Challan Identification Number (CIN). Also mention BSR code, date of payment, the serial number of challan and amount.

    Challan Identification Number

  • Demand has already been reduced by rectification/revision – Provide the date of order, demand amount after rectification , details of AO etc as given in below screen

    Demand has already been reduced

  • 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).

    details of appellate authority

  • Appeal has been filed - If you select this reason then details given in screen below needs to be provided

    Appeal has been filed

  • Rectification/revised return has been filed at CPC – If you select this reason, then please provide additional information related to this

    Rectification/revised return

  • Rectification has been filed with assessing officer – Mention the date of application and remarks (comments, if any of the taxpayer).

    Rectification has been filed with assessing officer

  • Others - If there is any other reason apart from mentioned above then select this reason and provide you comment

    Others


Option 3 : Disagree with demand

If assessees is totally disagree with demand then select “Disagree with demand” then below screen will be displayed

Disagree with demand

Select the appropriate reason.Reason are similar as available under ‘Demand is partially correct’.and discussed above


Option 4 : Demand is not correct but agree for adjustment

If taxpayer selects this option then given below screen will be displayed

taxpayer selects this option

If you click on continue then assessee has to select reasons for disagreement similar to “Demand is partially correct”


What are the consequences of not filing response?

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 demand of interest will be adjusted against refund without any confirmation of the assessee.


How to finding Jurisdictional Assessing Officer ?

Step 1 : Login into your income tax e-filing portal with your user id and password.
Login into your income tax e-filing
Step 2 : Select the profile settings -> My profile
Select the profile settings
Step 3 : Click on PAN details and given below screen will appear
Click on PAN details

How to Respond to the Assessing Officer?

Since the response is being made online no separate compliances in respect of responding to the Assessing Officer are required to be made unless and until specifically asked upon to do so by the Income Tax Department.


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- Tax2win has expertise in responding to Income Tax Department

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Frequently Asked Questions

Q- How do I change my refund outstanding demand?

Ans. By submitting the online response,taxpayers need to agree with demand raised by the department and then department will adjust the demand raised and issue an intimation u/s 245.


Q- Can Income Tax Dept. issue a notice under Sec. 245 for a previous year after awarding Certificate of Appreciation for a subsequent year?

Ans. Yes, Notice u/s 245 can be issued by the Department.


Q- Is Income Tax Section 245N(a) (iii) of Advance Ruling applicable for Residents also?

Ans. No, Section 245N(a) is applicable to Non-resident.It is only applicable to a certain category of residents (including public sector units)


Q- What happens if I don't respond to the notice within 30 days?

Ans. If the notice is sent by Assessing Officer and not responded in time, the assessee can attract a penalty.

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.