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How to respond to an income tax demand notice
August, 30th 2017

Once you have verified your income tax return after submitting it, the income tax department cross checks the income declared and tax paid by you with the information available with them.

If your tax calculations match that made by the assessing officer, then you will receive an intimation from the department accepting your tax return under section 143(1).

However, if it does not match, you will either get a tax refund notice or an outstanding tax demand notice. You will get a refund notice if you have paid more tax than what the assessing officer has calculated. On the other hand, if the assessing officer finds that you have paid less tax than what he has calculated, then you will be served with an outstanding tax demand notice.

If the department has sent you such an intimation of outstanding tax demand, you will have to go to an income tax office on the date and the time specified in the notice.

However, the government is trying to make this procedure taxpayer friendly by providing e-assessment methods. You can respond to the tax notices by logging in to your account on the e-filing website - https://incometaxindiaefiling.gov.in/.

Given below are the steps on how to respond to a tax demand notice using the e-filing website.

Step 1: Login to your account on the e-filing website by entering your credentials: User ID (PAN), password, date of birth and captcha code.

Step 2: Click on the 'e-file' tab and select 'Response to outstanding Tax Demand' option.

Step 3: You will be re-directed to a new page. Enter your PAN, captcha code and click on 'Submit'.

Step 4: An outstanding tax demand notice will appear on your screen with details such as assessment year (AY), section code (under which the notice has been served), demand identification number etc.

Step 5: Click on 'Submit' in the response column for the appropriate AY to submit your response. The assessee has to select one of these options:
a) Demand is correct
b) Demand is partially correct
c) Disagree with demand
d) Demand is not correct but agree for adjustment

If you select option A
If you select the 'Demand is correct' option, then a pop up will come up on your screen with a message 'If you confirm demand is correct then you cannot disagree with the demand'.

Click on submit if you agree with the department's calculations and you will get a success message. If there is any tax amount due, you have to pay it immediately.

Click on the hyperlink given under the column 'Pay Tax'. Click on 'Confirm' and you will be re-directed to the TIN website of NSDL which will help you pay your outstanding tax. Make sure that all the relevant auto populated information is correct. Select bank name, enter captcha code and click on proceed.

Click on submit to bank button to make the payment. When contacted on 29 August, 2017, the income tax helpline (1800 180 1961) said that the tax payer could optionally make a physical payment of the tax as well. However, this could not be independently verified. In any case remember that you will have to fill in details of the tax payment (made physically or online) to submit your response under the 'Response' column.

If you select option B
If you selected the 'Demand is partially correct' option, then two amount fields will appear on your computer screen.

The amount in the incorrect column will be filled automatically as the difference between outstanding demand and correct amount. You have to enter the amount which you believe is correct.

You are also required to select the reason given below on the website to justify why the demand is partially correct.

The reasons mentioned on the portal are as follows:

(a) Demand paid
i) Demand paid and challan has CIN
ii) Demand paid and challan has no CIN
(b) Demand already reduced by rectification/revision
(c)Demand already reduced by the Appellate order but appeal effect to be given
(d) Appeal has been filed
(i) Stay petition filed with
(ii) Stay granted by
(iii) Instalment granted by
(e) Rectification/Revised return filed at CPC
(f) Rectification filed with AO
(g) Others

Based on the reason/s selected you will be required to provide additional information depending on the option you have selected.

If you select option C
If you believe that the tax demand raised by the department is incorrect, you can select the option, 'Disagree with the demand'. Just like option (B), you will be required to select from the same reasons as mentioned above.

If you select option D
If you select 'Demand is not correct but agree for adjustment', then you will have to mention the reasons for your disagreement. The reasons are same as those mentioned above.

Enter the necessary details and click on 'submit'.

Once the information is successfully sent to the department then a transaction ID will be generated.

You can check your response by clicking 'View' in the response column. You can click on the 'transaction ID' to check the response sent by you to the department.

Points to remember
Once you have submitted your response, you should check your account everyday as the demand position gets updated daily. As per the income tax helpline (1800 180 1961), the department will not be sending you any communication via SMS or e-mail regarding the processing of your response. You would need to check the account regularly on your own. Alternatively, you can call the Centralized Processing Centre (CPC) in Bengaluru at 1800-425-2229 for further details.

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