The Income Tax Department may send you Income Tax 245 Notice to let you know that your current year’s refund will be used to any outstanding tax you owe from the previous year.
The Income Tax Department has the authority to offset any tax demand from the previous year with a refund from the current year via Income Tax 245 Notice. However, in order to use this authority, they must first notify the taxpayers by sending Income Tax 245 Notice and give them a chance to respond, whether they agree with it or not.
Table of Contents
Understanding the Income Tax Notice 245
Do not worry if you are unsure of how this demand was determined or if you should pay it or have it adjusted in accordance with Income Tax Notice 245. It’s possible that there was a real mistake or that your demand was estimated improperly. In order to help you respond to the increased demand, our experts can examine the return for the relevant year.
How to check Outstanding Tax Demand?
- Use your user ID and password to access your income tax portal.
- Navigate to the ‘Pending Actions’ page and select “Response to outstanding demand.”
- You can check the details from the screen that will appear
How do I respond to Income Tax 245 Notice?
When you receive Income Tax 245 Notice, carefully read it from cover to cover, checking all the information and the time frame (usually 30 days) for taking action. If you don’t take action, the outstanding demand as of that date will be taken into account for adjustment against your refund.
- Use your user ID and password to access your income tax portal.
- Choose the Pending Actions option. In response to an unfulfilled tax demand
- To submit a response, click submit.
- You will see the screen which shows two options/possibilities, let’s discuss in detail.
1st Possibility: In case you click on Demand is correct
- When the assesses choose “Demand is correct,” the pop-up shown below appears. Upon clicking the submit button, a message confirming your acceptance of the demand and the outstanding sum and the interest will be deducted from any refund that is owed, if any. If not, you must fulfil the requirement right away.
2nd Possibility: In case you disagree with the demand (Either in Part or In Full)
- In the event that the assesse choose “Disagree with Demand,” click “Add Reasons”.
- Choose a choice from the list, then click Apply. (You may choose a single choice or more.)
- Select each of the objections you specified in Step 2 and fill out the relevant fields on the Response to Outstanding Amount page after choosing the proper grounds for your disagreement.
Consequences for not responding to Income Tax 245 Notice
If no action is taken within 30 days of receiving Income Tax 245 Notice, the unpaid demand will be taken into account for calculating your refund, together with interest on demand. Interest will be added to any principal demands made after the end of the applicable assessment year. Without the assesse consent, the interest demand will be offset against the refund.