Income tax · Notices, assessment and appeals
There is an outstanding demand on the income-tax portal. How do I agree or disagree with it?
Short answer
Log in to the e-filing portal and open Pending Actions > Response to Outstanding Demand. For each demand, choose whether it is correct, partly correct or not correct. If correct, pay it with the 'Pay Now' option. If not, choose the reason (already paid, rectified, appealed, stayed and so on) and attach proof. Respond quickly: unanswered demands can be set off against your refunds and carry interest of 1% a month.
A demand is raised by a notice of demand under section 156 of the Income-tax Act, 1961 (now section 289 of the Income-tax Act, 2025), usually with an intimation or an assessment order. Demands for old years stay under the 1961 Act, but they can be recovered, and set off against refunds, under either Act.
How to respond
- Log in to the e-filing portal and go to Pending Actions > Response to Outstanding Demand.
- Each demand shows the year, section, amount and the order that raised it. Open the order and check it against your return.
- Choose one response:
| Response | When to use it | What happens |
|---|---|---|
| Demand is correct | You accept it | Pay with Pay Now; it is cleared once the challan is matched |
| Demand is partially correct | Part is right, part is wrong | Pay the correct part; give reasons and proof for the rest |
| Disagree with demand | It is wrong | Choose a reason and attach proof (see below) |
Common reasons for disagreeing:
- Demand already paid (give the challan details: BSR code, date and serial number).
- Demand reduced or deleted by a rectification order or an appeal order.
- Appeal filed against the order, with or without a stay.
- Stay granted by the Assessing Officer, the Commissioner or a court.
- Rectification application already filed (section 154, now section 287).
Why responding matters
- Refund set-off: before adjusting a refund against a demand, the department sends an intimation under section 245 (now section 438). If you don't reply in time, the refund is adjusted.
- Interest: unpaid demand carries 1% a month from the end of the period in the notice (section 220(2), now section 411(3)).
- Recovery: a demand that is neither paid nor stayed can lead to recovery action, including attachment of bank accounts.
If the demand is wrong because of a mistake
- If the mistake is apparent from the record (for example, TDS or advance tax not credited), file an online rectification request.
- If it needs arguments on facts or law, file an appeal, and apply for stay. See stay of demand.
Legal basis
- Sections 156, 220 and 245, Income-tax Act, 1961 (now sections 289, 411 and 438, Income-tax Act, 2025)
- Section 154, Income-tax Act, 1961 (now section 287): rectification
Official sources
Related questions
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