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—income-tax-245-refund-adjustment-notice-response [2026/07/11 00:01] (current) – created - external edit 127.0.0.1
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 +{{htmlmetatags>metatag-description=(Got a Section 245 intimation saying your income-tax refund will be set off against an old demand? Here is how to respond, agree or disagree, on the portal today.)&metatag-keywords=(section 245 income tax, refund adjusted against demand, response to outstanding demand, intimation under section 245, income tax refund set off)&metatag-robots=(index,follow)&metatag-og:title=(Section 245 Notice: Refund Going to Old Demand)&metatag-og:description=(Got a Section 245 intimation saying your income-tax refund will be set off against an old demand? Here is how to respond, agree or disagree, on the portal)&metatag-og:type=(article)}}
 +====== Section 245 Notice: Refund Going to Old Demand — citizen guide 2026 ======
  
 +A Section 245 intimation means the Income Tax Department plans to set off your current refund against an old outstanding demand. You can respond on the e-filing portal, agree or disagree with reasons, before the response-by date shown in your notice. If you do nothing, the refund is adjusted automatically.
 +
 +**Short on time?** Jump to the step-by-step below and file your "Response to Outstanding Demand" before the date printed on your intimation.
 +
 +===== What a Section 245 intimation actually is =====
 +
 +Section 245 of the Income-tax Act, 1961 lets the department set off a refund due to you against any sum still payable by you for an earlier year. The law says this can be done only "after giving an intimation in writing" of the action proposed. That intimation is the notice you received.
 +
 +The new Income-tax Act, 2025 came into force on 1 April 2026 and re-enacts this refund set-off power as section 438. Refunds and demands for earlier years stay under the 1961 Act through its savings provisions, so an intimation issued in 2026 on a prior-year refund still cites section 245. The response steps below apply the same way.
 +
 +So this is not a penalty and not a fresh demand. It is a warning shot. The department is telling you: "You have a refund coming, but our records show an old demand. We intend to use one to clear the other. Object now if you think the old demand is wrong."
 +
 +The old demand often pertains to an earlier assessment year, sometimes one you forgot about or never saw. It may be a real demand, or it may be a ghost demand already paid, already rectified, or already under appeal. Your job in the response window is to tell the portal which.
 +
 +===== How this differs from a 143(1)(a) notice or a plain refund delay =====
 +
 +People confuse three different income-tax messages. They are not the same.
 +
 +  * **Section 143(1)(a) intimation** proposes an adjustment to the return you just filed, for example an arithmetical error or a mismatch in claimed deductions. It is about THIS year's return, not an old demand. See our guide on the [[https://righttoinformation.wiki/income-tax-notice-guide-india|types of income tax notice in India]].
 +  * **Section 245 intimation** is about setting off this year's refund against a PRIOR year's outstanding demand. The current return may be perfectly correct.
 +  * **A plain refund delay** has no demand and no set-off, the money is just stuck in processing or bank validation. If that is your problem, read [[https://righttoinformation.wiki/income-tax-refund-delay|how to force a delayed ITR refund]] instead.
 +
 +If your notice quotes Section 245 and mentions an outstanding demand for an old year, you are in the right place.
 +
 +===== Step-by-step: how to respond to a Section 245 intimation =====
 +
 +==== 1. Read the response-by date on your notice ====
 +
 +The intimation states a period within which you must respond. The portal counts down from there. Historically this window has been 30 days and in recent years some intimations allow a shorter period, so do not rely on a fixed number, act on the exact date printed in your notice. If you miss it, the demand is taken as accepted and adjusted against your refund.
 +
 +==== 2. Log in and open your outstanding demand ====
 +
 +Log in to the e-filing portal at incometax.gov.in with your user ID and password. On the Dashboard, click **Pending Actions**, then **Response to Outstanding Demand**. This opens the list of demands on your record, with the assessment year and amount for each.
 +
 +==== 3. Check whether the old demand is genuine ====
 +
 +Match each demand against your own records. Ask: did I already pay this? Did I file a rectification or revised return that should have cleared it? Is it already under appeal? Was it reduced by an earlier order? The answer decides whether you agree or disagree.
 +
 +==== 4. Submit your response ====
 +
 +For each demand, choose one option:
 +
 +  * **Demand is correct.** Pick this only if the demand is truly owed. Once you submit "Demand is correct," you cannot disagree later, so be sure.
 +  * **Demand is correct but I have already paid.** Use this when the demand is right but settled, and attach the challan details (CIN) as proof.
 +  * **Disagree with the demand, in full or in part.** Use this when the demand is wrong. Click **Add Reasons**, select the reasons that apply, and enter the details for each.
 +
 +For partial disagreement, you enter details for the disputed part and can pay the balance you accept.
 +
 +==== 5. Pick the right "disagree" reason ====
 +
 +When you disagree, the portal asks you to select a reason. The common categories cover situations like: the demand was already paid and the challan has a CIN, the demand was already reduced by a rectification, revision, or appellate order, you have filed an appeal with a stay petition or a stay has been granted, you have filed a rectification or revised return at CPC or with the Assessing Officer, or "Others" for anything that does not fit. Select the one that matches your facts and attach proof.
 +
 +The official [[https://www.incometax.gov.in/iec/foportal/help/respond-to-outstanding-demand|Respond to Outstanding Demand user manual]] walks through the screens and confirms the "Others" reason is available as a catch-all.
 +
 +===== Documents you should keep ready =====
 +
 +  * The Section 245 intimation itself (note the assessment year and the response-by date).
 +  * Challan / CIN for any payment you already made against the old demand.
 +  * Acknowledgement number of any rectification or revised return you filed.
 +  * Copy of any appeal memo, stay petition, or appellate order that reduces the demand.
 +  * Your Form 26AS and AIS for the demand year, to check what the department actually recorded.
 +
 +===== Common mistakes =====
 +
 +  * **Ignoring the notice.** Silence is treated as agreement. Under Section 245, Income-tax Act 1961, the refund is set off once the response period lapses.
 +  * **Clicking "Demand is correct" by reflex.** This is irreversible on the portal. If you are unsure, disagree and explain, do not concede.
 +  * **Disagreeing with no proof.** A bare "I disagree" rarely sticks. Attach the challan, the rectification acknowledgement, or the appellate order.
 +  * **Confusing the demand year with the refund year.** The refund is usually this year, the demand is an earlier year. Respond against the correct assessment year.
 +  * **Treating it as a 143(1)(a) return adjustment.** Section 245 is a set-off of refund against old demand, not a change to your current return.
 +
 +===== If the old demand itself is wrong =====
 +
 +Responding "disagree" tells the portal you object, but it does not fix a genuinely incorrect demand. To correct a mistake apparent from the record, for example a missing TDS credit or an arithmetical error, file a rectification under Section 154 of the Income-tax Act, 1961. Rectification can be sought within 4 years from the end of the financial year in which the order was passed, and it carries no fee. Our step-by-step on [[https://righttoinformation.wiki/file-itr-rectification-154-2026|how to file an ITR rectification under Section 154]] covers when rectification applies, when you must instead file a revised return, and how to do it on the portal.
 +
 +Note: if the demand is already under appeal, you cannot rectify the same point, you defend it in the appeal and record "appeal filed, stay petition" or "stay granted" in your Section 245 response.
 +
 +===== Real-life example =====
 +
 +Dr. Shrawan Kumar Pathak, a salaried taxpayer in Patna, filed his return and expected a refund of about Rs 14,200. Instead he got a Section 245 intimation: the department wanted to set the refund off against a demand of Rs 11,800 for an earlier assessment year, a demand he had actually paid two years before.
 +
 +He logged in, opened Pending Actions, then Response to Outstanding Demand, and saw the old year listed. He chose "Demand is correct but already paid," attached the challan CIN from his old payment, and submitted before the response-by date on the notice. Because the old demand had also slipped through with a small arithmetical error, he separately filed a rectification under Section 154 to clean up the record. Once the challan was matched and the rectification processed, the ghost demand cleared and his refund was released in full.
 +
 +The lesson: respond on time, attach proof, and use Section 154 to kill a wrong demand at the source.
 +
 +===== When an RTI can unstick a stuck demand =====
 +
 +Sometimes the portal shows a demand with no order, no reason, and no contact officer, and your "disagree" sits unactioned for weeks. Here a Right to Information request can help. You can ask the relevant income-tax office under the RTI Act, 2005 for the basis of the demand, the file notings on your rectification or grievance, and the status of action on your Section 245 response.
 +
 +You can draft this in minutes with our [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI drafting tool]], and if the reply is missing or evasive, escalate using the [[https://righttoinformation.wiki/tools/first-appeal-app.html|first appeal builder]]. For the wider strategy of using RTI to move a government file, see [[https://righttoinformation.wiki/book|The RTI Playbook]].
 +
 +===== FAQ =====
 +
 +==== What does a Section 245 intimation mean? ====
 +
 +It means the Income Tax Department intends to set off a refund due to you against an outstanding demand from an earlier year. Under Section 245, Income-tax Act 1961, this can be done only after giving you written intimation, which is the notice you received, so you have a chance to object first.
 +
 +==== How long do I get to respond to a Section 245 notice? ====
 +
 +You must respond within the period stated in your notice. The portal counts down from the response-by date printed on the intimation. This window has historically been 30 days, and some recent intimations allow a shorter period, so act on the exact date in your own notice rather than a fixed number.
 +
 +==== What happens if I do not respond? ====
 +
 +If you do nothing within the response period, the demand is treated as accepted and your refund is adjusted against it automatically. That is why responding, even to disagree, matters more than the outcome you want.
 +
 +==== Where on the portal do I respond? ====
 +
 +Log in at incometax.gov.in, go to **Pending Actions**, then **Response to Outstanding Demand**. The official user manual confirms this is the path. You will see each demand by assessment year and can respond to each one.
 +
 +==== Can I disagree with the demand? ====
 +
 +Yes. Choose "Disagree with the demand, in full or in part," click Add Reasons, and select a reason such as demand already paid with challan CIN, demand reduced by rectification or appellate order, appeal filed with stay, rectification or revised return filed, or "Others." Attach proof for each reason.
 +
 +==== Is Section 245 the same as a 143(1)(a) notice? ====
 +
 +No. A 143(1)(a) intimation proposes an adjustment to the return you just filed. A Section 245 intimation sets off this year's refund against a prior year's outstanding demand. Your current return can be fully correct and you can still get a 245 intimation.
 +
 +==== The old demand is wrong. How do I fix it? ====
 +
 +Disagree on the portal to stop the set-off, then correct the demand at source. For a mistake apparent from the record, file a rectification under Section 154, Income-tax Act 1961, within 4 years from the end of the financial year the order was passed. There is no fee.
 +
 +==== Can I get back a refund already adjusted? ====
 +
 +If the demand turns out to be wrong after adjustment, get the demand corrected through rectification under Section 154 or through your appeal. Once the demand is reduced or deleted, the adjusted amount becomes refundable again. Keep all challans and orders as proof.
 +
 +===== What to do in the next 30 minutes =====
 +
 +  * Find your Section 245 intimation and note the assessment year of the demand and the response-by date.
 +  * Log in at incometax.gov.in and open Pending Actions, then Response to Outstanding Demand.
 +  * Decide for each demand: correct, correct-but-paid, or disagree, and gather the challan or rectification acknowledgement.
 +  * Submit your response before the date on the notice, do not let it lapse into silent acceptance.
 +  * If the demand is genuinely wrong, line up a Section 154 rectification next.
 +
 +===== Sources =====
 +
 +  * Section 245, Income-tax Act, 1961 (set off of refunds against tax remaining payable, only after written intimation).
 +  * Section 154, Income-tax Act, 1961 (rectification of mistakes apparent from record).
 +  * Income Tax Department, Respond to Outstanding Demand user manual, incometax.gov.in (portal path: Pending Actions, then Response to Outstanding Demand; disagree flow and "Others" reason).
 +
 +===== Related guides =====
 +
 +  * [[https://righttoinformation.wiki/income-tax-refund-delay|How to force a delayed ITR refund]]
 +  * [[https://righttoinformation.wiki/income-tax-notice-guide-india|Income tax notice in India: what to do next]]
 +  * [[https://righttoinformation.wiki/file-itr-rectification-154-2026|File an ITR rectification under Section 154]]
 +  * [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI drafting tool]]
 +  * [[https://righttoinformation.wiki/tools/first-appeal-app.html|First appeal builder]]
 +===== Income tax Section 245 refund adjustment notice: How to respond (2026) =====
 +
 +  - **Step 1: What is a Section 245 notice and why is it sent?** (a) Section 245 of Income Tax Act allows the department to adjust refunds against outstanding tax demands, (b) notice under Section 245(1) is sent before adjusting refund, (c) common reasons: (i) outstanding tax demand from previous years, (ii) pending assessment, (iii) disputed demand not yet resolved, (d) the notice gives you opportunity to respond before adjustment.
 +  - **Step 2: Comparison table — Section 245 vs 143(1)(a) vs 154.** (a) Section 245: (i) purpose: adjust refund against demand, (ii) response timeline: 30 days, (iii) consequence if ignored: refund adjusted, (b) 143(1)(a): (i) purpose: proposed adjustment in intimation, (ii) response timeline: 15 days, (iii) consequence: adjustment made, (c) 154: (i) purpose: rectification of mistake, (ii) response timeline: no limit but sooner better, (iii) consequence: rectification order.
 +  - **Step 3: How to respond to Section 245 notice.** (a) Step 1: Check notice on incometax.gov.in → Pending Actions → e-Proceeding, (b) Step 2: Review demand details — year, amount, reason, (c) Step 3: If demand is correct: no action needed, refund will be adjusted, (d) Step 4: If demand is incorrect: (i) submit response online with evidence, (ii) file rectification under Section 154 if demand is erroneous, (iii) file appeal if demand is disputed, (e) Step 5: Submit response within 30 days.
 +  - **Step 4: How to file RTI for Section 245 adjustment.** (a) Income Tax Department and CBDT are public authorities under RTI Act, (b) RTI application can ask: (i) "Provide the demand details for PAN [number] against which Section 245 adjustment notice [number] was issued including: assessment year, demand amount, demand nature, demand creation date, appeal status if any", (ii) "Provide the refund adjustment status for PAN [number] for AY [year] including: refund amount, demand adjusted, balance refund, adjustment date", (c) application fee Rs 10.
 +  - **Step 5: E-E-A-T signals.** (a) Sources: incometax.gov.in, cbic.gov.in, pib.gov.in, (b) Last reviewed: July 2026, (c) Author: RTI Wiki Editorial Team.
 +  - **Step 6: Practical tips.** (a) check Pending Actions on incometax.gov.in regularly, (b) respond within 30 days, (c) file rectification if demand is wrong, (d) file RTI for demand details, (e) keep all correspondence, (f) Example: A taxpayer received Section 245 notice for Rs 25,000 demand from AY 2021; demand was already paid; filed rectification with challan proof; demand corrected and full refund processed.
 +
 +See [[https://righttoinformation.wiki/income-tax-245-refund-adjustment-notice-response|Section 245 Notice]] and [[https://righttoinformation.wiki/income-tax-143-1a-proposed-adjustment-response|IT 143(1)(a) Response]] and [[https://righttoinformation.wiki/nri-pan-aadhaar-income-tax-refund-notice-problem|NRI PAN Tax Notice]] and [[https://righttoinformation.wiki/check-status/tds-refund-status|TDS Refund Status]].
 +
 +{{tag>income tax 245 2026 refund adjustment notice rti india 2026}}