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November 1, 2018
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November 1, 2018

Responding to Notice under section 245

Last Update Date : April 29, 2019
Estimated Read Time: 3 min

The only news we like to receive from the Income Tax Department is that we will be getting a tax refund. So, when you receive a notice u/s 245 for outstanding tax demand, it can bring forth your worst nightmares about what you might’ve done wrong to receive such a notice.  However, when you receive a notice u/s 245, it is similar to how a bank levies charges for not maintaining the minimum balance, but however if you at the last minute deposit the amount required, then the bank can adjust the charges levied.

Responding to Notice u/s 245

What is notice under section 245 and Why did I receive it?

If you are the recipient intimation under secton 245 from the Income Tax Department(ITD), then it means the Assessing Officer (AO) has cause to believe you have an outstanding demand from previous assessment years, that he proposes to adjusted against the current year’s tax refund due to you.  As per  section 245, if the tax department wishes to adjust any refund due to a taxpayer against any past outstanding demand in his/her name, then the taxpayer must be notified before the adjustment between the demand and the refund can be made, so that he/she has the chance to explain why such an adjustment is not justified and the why the demand needs to be rectified, if any error has taken place in raising the demand.

[ Read: What is Assessment Year ]

How to Download Income Tax Assessment Order?

To view the details of the outstanding demand in question follow these simple steps:

  • Log on here and login to your account.
  • From here, select “Respond to outstanding demand” under e-file tab and you will see either of these options, which explains in detail how to submit a response to a Outstanding Tax Notice :
    1. Demand is correct – If you select this then you cannot disagree with the amount owing
    2. Demand is partially correct – Fill in the amount you feel you should pay and select the reason for the correction from the list displayed
    3. Disagree with the demand -The same step as above needs to be taken
    4. No options – AO has finalized demand

How H&R Block can help you?

Receiving a tax notice is never a pleasant experience and failure to respond to it correctly can result in further proceedings or penalties.  To ensure any notices you receive are handled with care and attention to detail, consult your personal tax experts at H&R Block India to get instant tax notice assistance.

Response to intimation under section 245

To respond to the notice, you need to submit the proofs, online, if you have any demands, as most assessments are processed online now, except for rare manual scrutiny cases.  It is important that you respond accordingly to the notice served within the time stipulated to avoid facing penalties.  However, understanding the notice and the method for how the outstanding demand was raised can be confusing.  For easy handling of any notices you receive, consult the experts at H&R Block India for easy processing of your scrutiny notices.

Consequences of not responding to notice u/s 245

If you fail to pay the amount demanded as per the notice under section 245 of the Income Tax Act, then you will be liable to interest, penalties and in rare circumstances prosecution as per Chapter XVII-D of the Income Tax Act.  The interest levied will be 1% for every month for default in payment as per section 220(2).

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CA Shreya Oturkar
Shreya is a tax advisor at H&R Block (India) with intensive experience in SME taxation and audit. She holds an advanced post graduate qualification in accounting and is highly skilled in financial analysis and reporting. Apart from her professional achievements, Shreya is a talented artist with a flair for free-hand sketching!

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