Income Tax

Did you receive Intimation under section 245 of the Income Tax Act?

Many times, a taxpayer pays tax more than the due tax liability over him. In such circumstances, it is expected that the taxpayer has filed the refund to the Income Tax Department for the respective exceeded amount. In extension to this, there are cases where the taxpayer has a certain outstanding amount for the successive financial year. Therefore, the Income Tax Department responds to refund requests by adjusting the refund amount to the due amount for the next Income Tax Return, which is supposed to be filed by the taxpayer. However, before proceeding with adjustment, the Income Tax Department is required to share the intimation regarding such adjustment to the taxpayer through a notice under section 245 of the Indian Income Tax Act. Respective Taxpayer is required to respond to the intimation under section 245 either by agreeing to the adjustment or asking for a refund in place of adjustment. The Income Tax Department can only adjust the amount if the taxpayer agrees.

Authenticate notice under Section 245

There are many circumstances where a notice can be an act of hoax rather than genuine intimation by the Income Tax Department. Therefore, if you have received a notice under Section 245 of the Income Tax Act, it is recommended to authenticate the notice through the government e-filing website before responding to such notice.

How to respond to Notice under Section 245

When you receive a notice under section 245 of the Income Tax Act, it is important that it has been responded to well within time as per your stance on the notice. Generally, the notice has two possible stances: (i)you agree with the demand, and (ii)you agree partially or disagree with the adjustment of your requested refund. You may respond to any of the stances in the following manner:

Step 1: Visit the website- Income Tax e-filing portal

Step 2: Log into your account using your credentials (PAN and Password).

Step 3: Select “Pending Actions” on the navigation panel. A drop-down menu will appear.

Step 4: Select the “Response to outstanding demand” option from the shown drop-down menu.

Step 5: Details will appear on the screen, where you may check your outstanding Tax Demand amount.

Step 6: Select “Submit Response” in the bottom right corner of the screen.

Step 7: A column on the screen will appear showing “Response Form Assess”. There will be two visible options: (i) Demand is correct, (ii)Disagree with Demand (full or partial).

Step 8: Select option (i) if you want your requested refund to be adjusted, or else select option (ii) if you do not want to get your refund adjusted.

Step 9: on selecting option (ii), an option of “reason” will appear with a drop-down list showing reasons for disagreement. You may select one or more than one option. And then submit the response.

Consequences of NOT responding to Notice under Section 245

Notice received under Section 245 of the Indian Income Tax Act¹ generally holds a time limit of 30 days for being responded to by the taxpayer. In such circumstances, if the taxpayers fail to respond to the notice within time, it is assumed by the Income Tax department that the outstanding amount for refund has been agreed by the taxpayer to be adjusted against the successive year’s outstanding demand amount. This principal demand (if it is pending for the relevant assessment year) is subject to interest. The refund amount is adjusted against the demand amount after adding interest to the sum, without the taxpayer’s confirmationr.

Outstanding Tax Demand: Track Details

You may check the Outstanding Tax Demand in order to check the notice under Section 245 of the Income Tax Act that how much amount is being adjusted.

Step 1: Visit the Income Tax Portal and Log into your account using your PAN and Password

Step 2: Select “Pending Actions” on the navigation panel. A drop-down menu will appear.

Step 3: Select the “Response to outstanding demand” option from the shown drop-down menu.

Step 4: Details will appear on the screen, where you may check your outstanding Tax Demand amount.

Conclusion

A taxpayer generally expects to receive intimation from the Income Tax Act under section 245 of the Income Tax Act as a response to their request for a refund for exceeding tax paid by the taxpayer, more than the amount due on them. Upon receipt of such notice, people get in a panic state, wondering what and how to respond. No notice is of concern if responded well. Taxpayers are suggested to respond to the notice received rather than ignoring it, as ignorance might lead to the assumption of it being accepted by you. Therefore, to avoid any expected consequences, ensure you respond to the notice within time.

FAQs

1. https://incometaxindia.gov.in/pages/acts/income-tax-act.aspx