Tax Demand Notice TAXCONCEPT

ITR filing: The article discusses the procedure for responding to an income tax demand notice. It provides a step-by-step guide for taxpayers to access and respond to the demand notice online. The options for responding to the demand notice are outlined, including details for each option such as providing additional information and submitting required documents. The FAQ section addresses common queries related to outstanding tax demands, responses, and payment methods. It also provides information on how to view past responses and regenerate challans.

If a taxpayer’s income tax return is in conflict with the assessment made by an Income Tax Officer, the taxpayer will be issued an income tax demand notice. Income tax demand notice is issued if the taxpayer has deposited lesser tax than what the assessee is liable to pay. In this article, we look at the procedure for responding to an income tax demand notice.

Your jurisdictional Income Tax Officer (ITO) will upload the Demand Notice online. You can access the content of this notice by logging into your e-filing account on the website www.incometaxindiaefiling.gov.in, where you can record your responses.

Step-by-Step Guide to Respond to a Demand Notice

Step 1: Log in to your e-filing account on www.incometaxindiaefiling.gov.in with your user ID and password.

Step 2: Click on ‘E-file’ and go to ‘Respond to Outstanding Tax Demand’.

You will see the following details displayed-

Assessment year
Section code
Demand notification number
Date on which demand is raised
Outstanding demand amount
Uploaded by
Rectification rights
Response – submit and view

Step 3: Click on ‘Submit’ for the relevant assessment year. Choose one of the options mentioned below-

Demand is correct
Demand is partially correct
Disagree with demand

What are the options to respond to Demand Notice

Option 1 – Demand is correct

Step 1: When you select this option, a pop-up screen appears with the message ‘If you confirm, demand is correct then you can’t disagree with the demand’.

Step 2: Click on the ‘Submit’ button.

Step 3: A success message will be displayed.

Step 4: If a refund is due, the outstanding amount and the interest will be adjusted against the refund due. Otherwise, you must pay the demand immediately.
Read about how to pay your tax demand

Option 2 – Demand is partially correct

Step 1: You will see two fields to enter a correct and incorrect amount.

Step 2: Once you enter the amount in the fields, you must choose a reason for stating the department’s calculation to be partially correct.

Demand has already been paid: Provide the Challan Identification Number (CIN). Also mention the BSR code, date of payment, the serial number of challan and amount. You can also add your comments under ‘remarks.’ If CIN is unavailable, mention that the demand has been paid by challan and CIN is unavailable. Also, mention the date of payment, amount, and remarks (your comments), if any.
Demand has already been reduced by rectification/revision – Provide the date of order, demand amount, and details of jurisdictional ITO who has rectified. Next, upload the rectification/appeal effect order passed by the ITO.
Demand has already been reduced by appellate order but appeal effect has to be given by the department – Provide the date of order and the appellate order passed by (details of appellate authority, and the reference number of order).
Appeal has been filed and stay petition has been filed, or stay has been granted by, or instalment has been granted by – Provide the date of filing of the appeal, appeal pending with appellate authority e.g., CIT(A) or ITAT, stay petition filed with details of the office. If the stay has been granted, you must also upload a copy of the stay order.
Rectification/revised return has been filed at CPC – In addition, please furnish the following details.
- Filing type
- E-filed acknowledgement number
- Remarks (comments, if any of the taxpayer)
- Upload challan copy
- Upload the TDS certificate
- Upload letter requesting rectification copy
- Upload indemnity bond
Rectification has been filed with the assessing officer – Mention the date of application and remarks (comments, if any of the taxpayer).

Option 3 – Disagree with the Demand

Step 1: Upon choosing this option, you must provide details of why you disagree with the department’s call.

Step 2: You must also provide reasons for your disagreement from the available options.

Step 3: Submit your response to view a success screen with a transaction ID.

Step 4: You can revisit the response when you click on ‘View’ under the ‘Response’ tab.

Step 5: You can view the serial number, transaction ID, date of response, and response type will be displayed.

Additional Documents to be Submitted

Any taxpayer who chooses the “Demand is Partially Correct” option would have to provide additional information as provided below:

Reason Demand is Partially Correct	Additional Information
Demand paid and challan has CIN	BSR CodeDate of paymentSerial NumberAmountRemarks
Demand paid and challan has no CIN	Date of paymentAmountRemarksUpload Copy of Challan
Demand already reduced by rectification / Revision	Date of OrderDemand after rectification/ revisionDetails of AOUpload Rectification / Giving appeal effect order passed by AO
Demand already reduced by Appellate Order but appeal effect to be given	Date of OrderOrder passed byReference Number of Order
Appeal has been filed: Stay petition has been filed	Date of filing of appealAppeal Pending withStay petition filed with
Appeal has been filed: Stay has been granted	Date of filing of appealAppeal Pending withStay granted byUpload copy of Stay
Appeal has been filed: Instalment has been granted	Date of filing of appealAppeal Pending withInstalment granted byUpload copy of stay/instalment order
Rectification / Revised Return filed at CPC	Filing Typee-Filed Acknowledgement No.RemarksUpload Challan CopyUpload TDS CertificateUpload Letter requesting rectification copyUpload Indemnity Bond

Respond to Outstanding Demand FAQ

1. Why do I need to submit response to an outstanding demand?
The Income Tax Department may find some Outstanding Tax demand against your PAN. In order to confirm if the stated demand is correct, an opportunity is given to you to respond. If you do not respond to it, the demand will be confirmed and will be adjusted against your refund (if any) or show as demand payable against your PAN ( in case, no refund is due).

2. How do I know if there is any outstanding demand pending against my PAN?
You can check if there is any outstanding demand through the e-Filing portal. Log in to e-Filing portal and click Pending Actions > Response to Outstanding Demand and you will be taken to Response to outstanding demand page. If there are demands outstanding against your PAN, the current status against each of the past / existing outstanding demands will be updated as Pending payment / Response. Accordingly, you can click Pay Now / Submit Response. Additionally, you will receive a message on your email ID and mobile number registered on the e-Filing portal.

3. What can I do if I disagree with the amount of outstanding demand?
You can choose Disagree with demand (Either in Full or Part). After you select the option, you need to select from the list of reasons for which you disagree with the amount of demand. After you have selected from the list, you would need to provide details for each of the reasons before you submit your response. In case you partially disagree with the demand, you should pay the portion of the demand which is undisputed (i.e. with which you agree).

4. What can I do if the reason of disagreement with the outstanding demand is not listed?
You can select Others as a reason after you choose Disagree with demand (Either in Full or Part). After selection, you can enter the details for your reason and the applicable amount not payable under the mentioned reason.

5. Where can I view the past responses I submitted?
After you log in to e-Filing portal, click Pending Actions > Response to Outstanding Demand and you will be to the Response to outstanding demand page. Among the list of past and the existing outstanding demands click on View against the particular demand. You will only be able to see the View option for the demands for which you have already submitted at least one response.

6. While selecting reasons in Response to Outstanding Demand page, I am getting the message – No records found for revised/rectified return for the assessment year. What can I do?
Please try again. If the problem persists, please validate the Acknowledgement no. received after submission of your Rectification / Revised Return request.

7. How do I pay the outstanding tax demand?
You can make payment of your Income Tax Demand through the e-Filing portal in the following ways:

Directly pay tax by clicking the Pay Now option for the respective DRN (Demand Reference Number) on the Response to Outstanding Demand page; or
Using the Pay Now option while submitting the response to the outstanding demand (in case you agree or you partially agree with the outstanding demand).

8. What are the different ways in which I can make payment?
You can make payment through the e-Filing portal. You can use the following online methods to make tax payment:

Net-banking; or
Debit Card; or
Payment Gateway (using Credit Card/Debit Card of Non-Authorized Banks/Net Banking of Non-Authorized Bank/UPI)

You can use the following offline methods to make tax payment:

NEFT / RTGS (the Mandate Form generated may be submitted to the bank or used for online transfer using Net-banking); or
Pay over the Counter (through Cash / Cheque / Demand Draft).

Refer to the Make Payment Online and Make Payment Offline user manual to learn more.

9. What if I do not have the copy of the challan to be attached? Where can I find it?
You can reprint / regenerate your challan from your respective bank account using Net Banking or visiting the bank branch.