The Income Tax Department issues intimations and notices to taxpayers for a range of purposes. Intimation under section 245 of the Income Tax Act is specifically dispatched when there is an outstanding tax liability for any previous years. Under this intimation, the previous financial year’s outstanding liability is proposed to be adjusted against the tax refund of the current financial year. The Assessing Officer (AO) has the authority to offset any tax refunds against this outstanding amount.
Intimation u/s 245 of Income Tax
Intimation u/s 245 of the Income Tax Act is issued by the IT Department to inform the taxpayer that their previous year’s pending tax dues are being offset with the current year’s refund. The details of such intimation are reflected in the income tax login account of the taxpayer. The taxpayer has the option to pay the outstanding demand if they agree with the notice or submit a response if they disagree with the notice. If the taxpayer does not respond, the AO can adjust the refund against the outstanding tax demand.
Viewing Details of the Outstanding Tax Demand
The taxpayers can view the details of their outstanding tax demands on the Income Tax e-Filing portal. The taxpayers can view the intimation by logging in to the IT portal and navigating to Pending Action and Response to Outstanding Demand. Hence, details related to the same would be available under this view. The taxpayer also has to submit a response to the IT Department. This action can also be carried out from under this view.
Responses to Notice under Section 245 of the Income Tax Act
It is important to go through the details of the notice after receiving it from the department. Along with the details, it is also important to respond back to this notice within 30 days. Moreover, if the deadline to respond to such a notice elapses then the outstanding demand as of that date will be considered for adjustment against your refund. The following are the possible responses:
- Demand is Correct:
- If you agree with the outstanding demand then you can log in to the income tax e-filing portal and enter a response that states that the demand is correct.
- Disagree with Demand (Either in Full or in Part):
- If you do not agree with the outstanding tax demand then you need to login to the portal and enter the response stating that you do not agree/partially agree with the demand. In such a situation, you will also have to provide reasons for your response.
How to Respond to Intimation u/s 245 of Income Tax?
The steps to submit a response u/s 245 are:
- Visit the e-filing portal
Visit the e-filing and log in using valid credentials.
- Navigate to e-Proceedings
Click on Pending Actions > e-Proceedings
- View Notice u/s 245
Click on the option to view the notice under the “Self” tab.
- Notice or Letter pdf
Click on the notice/letter pdf option.
- Submit Response
Click on the option to submit a response.
- 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)
- 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.
- 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.
- Declaration
Select the Declaration checkbox and click Proceed to E-Verify.
Consequences of No Response to the Intimation u/s 245
The taxpayer has to submit a response to the intimation under section 245 of the Income Tax Act within 30 days of receiving this notice. Failing to do so will result in outstanding demand considered for adjustment against your refund after considering interest on demand. The interest is chargeable on principal demand pending relevant AY. Therefore, the demand and interest on the demand will be adjusted against the refund.
FAQs
The IT department sends the communication of intimation to the taxpayer typically though electronic means, such as e-mail and the taxpayer e-filing account.
An intimation can be send to the taxpayer within a period of 9 months from the end of the financial year.
Yes, taxpayers can access their income tax records and see the status of their outstanding tax liability and refunds through the official income tax e-filing portal.
Taxpayers should maintain records of their tax returns, acknowledgment receipts, and any communication with the Income Tax Department, as these may be needed for reference in case of disputes or clarifications.