Important Keyword: Income Tax, Refund & Notices, Section 245.

The Income Tax Department sends various notices and intimations to taxpayers for different reasons. One specific type of intimation is under Section 245 of the Income Tax Act. This notice is sent when there is an unpaid tax liability from previous years. In such cases, the department plans to adjust this unpaid amount against any tax refund that is due for the current financial year. The Assessing Officer (AO) has the power to use the tax refund to pay off the outstanding tax from earlier years.

Intimation under Section 245 of Income Tax

An intimation under Section 245 of the Income Tax Act is sent by the Income Tax Department to notify the taxpayer that their previous year’s pending tax dues are being offset against the current year’s refund. These details can be found in the taxpayer’s income tax login account. If the taxpayer agrees with the notice, they can pay the outstanding demand. If they disagree, they can submit a response. If the taxpayer does not respond, the Assessing Officer (AO) will adjust the refund against the outstanding tax demand.

Viewing Details of the Outstanding Tax Demand

Taxpayers can check the details of their outstanding tax demands on the Income Tax e-Filing portal. To do this, they need to log in to the portal and navigate to the “Pending Actions” section, then select “Response to Outstanding Demand.” Here, they can view the intimation and submit their response to the IT Department.

Responses to Notice under Section 245 of the Income Tax Act

When you receive an intimation under Section 245 from the Income Tax Department, it’s crucial to review the details carefully. You must also respond to this notice within 30 days. If you miss this deadline, the outstanding demand as of that date will be adjusted against your refund. Here are the possible responses:

Demand is Correct

If you agree with the outstanding demand, log in to the income tax e-filing portal and submit a response indicating that the demand is correct.

Disagree with Demand (Either in Full or in Part)

If you disagree with the outstanding tax demand, either fully or partially, log in to the portal and submit a response stating your disagreement. In this case, you will also need to provide reasons for your disagreement.

How to Respond:

1. Login: Access the income tax e-filing portal.
2. Navigate: Go to “Pending Actions” and select “Response to Outstanding Demand.”
3. Respond: Choose the appropriate response option (agree or disagree) and provide necessary details and reasons if you disagree.

How to Respond to Intimation u/s 245 of Income Tax?

The steps to submit a response u/s 245 are:

1. Visit the e-filing portal
   Visit the e-filing and log in using valid credentials.
2. Navigate to e-Proceedings
   Click on Pending Actions > e-Proceedings
3. View Notice u/s 245
   Click on the option to view the notice under the “Self” tab.
   
4. Notice or Letter pdf
   Click on the notice/letter pdf option.
   
5. Submit Response
   Click on the option to submit a response.
   
6. Options to Respond to the Notice
   Details of Outstanding Demand related to 245 demand will be displayed. You can either select Demand is correct or Disagree with Demand (Either full or Part)
   
7. Demand is Correct
   If you select Demand is correct, you will be required to select the checkbox and provide an answer to Have you already paid the demand amount and add the challan details, if already paid click Save.
   
8. Disagree with Demand
   If you select Disagree with Demand (Either full or Part), you will have to add reason(s) for disagreement and click Save.
   
9. Declaration
   Select the Declaration checkbox and click Proceed to E-Verify.
   

Consequences of No Response to the Intimation u/s 245

Upon receiving an intimation under Section 245 of the Income Tax Act, the taxpayer must submit a response within 30 days. If the taxpayer fails to respond within this period, the outstanding demand, along with the applicable interest, will be adjusted against any refund due. The interest is charged on the principal demand pending for the relevant assessment year (AY). Therefore, both the principal demand and the interest will be deducted from the refund.

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Official Income Tax Return filing website: https://incometaxindia.gov.in/