Income Tax Refund Delayed? Section 245 Notice Means Demand Adjustment

Receiving a notice from the Income Tax Department can be unsettling, especially if it impacts your expected tax refund. A Section 245 notice, specifically an 'intimation', is issued when the department proposes to adjust your upcoming income tax refund against any outstanding tax demand from a previous financial year.

Understanding the Section 245 Notice

This notice is a formal communication from the Income Tax Department under Section 245 of the Income Tax Act, 1961. It essentially states that the department has identified a tax demand that is due from you, and they intend to use your current year's tax refund to settle this outstanding amount. This is a common procedure to recover pending tax dues efficiently.

What You Need to Do

Upon receiving a Section 245 notice, it's crucial to take prompt action. The notice will typically outline the details of the tax demand, including the assessment year and the amount due. Taxpayers have a specific window of time, usually mentioned in the notice, to respond.

• Check Demand Details: Log in to your account on the official Income Tax e-filing portal (incometax.gov.in). Navigate to the 'Demand Status' or a similar section to view the specifics of the outstanding demand mentioned in the notice. Verify if the demand is accurate and if you have any records related to it.
• Respond to the Notice: You have two primary options:
• Accept the Demand: If you agree with the tax demand raised by the department, you can accept it. In this case, your refund will be adjusted against the demand. If the refund amount is less than the demand, you will still owe the remaining balance. If the refund is more than the demand, the excess amount will be processed and sent to you.
• Dispute the Demand: If you believe the demand is incorrect, you have the right to dispute it. You will need to provide valid reasons and supporting documents to the department to contest the demand. This might involve filing a rectification application, an appeal, or providing clarification as required.

Importance of Timely Response

Ignoring a Section 245 notice can lead to the automatic adjustment of your refund against the demand. If you wish to dispute the demand, failing to respond within the given timeline will likely result in the department proceeding with the adjustment. It is always advisable to address such communications promptly to avoid any complications or unnecessary deductions from your refund.

Checking Your Refund Status

If your refund has been adjusted, you can track its status on the e-filing portal. The portal usually provides details on whether the refund has been fully or partially adjusted against the demand.

This article is for informational purposes only and does not constitute financial advice.