Got An ITR Demand Notice? Here's What You Need To Do

Receiving a demand notice from the Income Tax Department under section 143 of the Income Tax Act can be a daunting experience for many taxpayers in India. However, it’s crucial to remain calm and take appropriate steps to address the situation promptly. Understanding the process and following the right approach can help you resolve the matter smoothly.

You have two choices when you receive an income tax return (ITR) demand notice: either to accept the demand or challenge it.

Note: Before proceeding, ensure you have an active account on the Income Tax e-filing portal and have linked your PAN with the portal.

Accepting Demand Through ITR Portal:

  1. Log in to the Income Tax e-filing Portal: Visit and log in using your User ID (PAN) and password. Enter the captcha code and click on the “Login” button.
  2. Navigate to “Outstanding Demand” Section: After logging in, click on the “View Returns/Forms” option from the dashboard. Select the relevant assessment year for which the demand is raised. Under the “My Account” menu, choose “Outstanding Demand.”
  3. View and Validate the Demand: The portal will display the outstanding demand for the selected assessment year. Ensure the demand details, including the assessment year, demand amount, and applicable interest, are accurate.
  4. Respond to the Demand: To accept and clear the demand, click on the “Submit” button under the “Response” column. You will be prompted to select the response type (Demand is correct / Demand is partially correct / Disagree with demand).
  5. Make Payment (If Applicable): If you agree with the demand and it is valid, select “Demand is correct” and proceed to make the payment. Choose the payment method, such as internet banking, debit card, or NEFT/RTGS, to clear the outstanding amount.
  6. Generate Challan for Payment: After choosing the payment method, the portal will redirect you to the relevant payment gateway. Complete the payment process and generate the challan. Keep a copy of the challan as proof of payment.
  7. Update Response on the Portal: Once the payment is made, go back to the “Outstanding Demand” section and click on “Response” again. This time, select “Demand is paid.” Enter the challan details, such as BSR code, challan serial number, and date of payment.
  8. Verify and Submit: Double-check all the details before submitting your response. Once you are satisfied that the information provided is accurate, click on the “Submit” button.

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Challenging Demand Through ITR Portal:

  1. Log in to the Income Tax e-filing Portal: Visit and log in using your User ID (PAN) and password. Enter the captcha code and click on the “Login” button.
  2. Navigate to “e-Proceeding” Section: After logging in, click on the “e-Proceeding” option from the dashboard. Under this section, select the “Submit” option from the drop-down menu.
  3. Choose “Disagree with Demand”: In the “Submit” tab, select “Disagree with Demand” as the option for e-Proceeding.
  4. Provide Details and Grounds of Disagreement: You will be asked to provide details of the demand, the grounds for disagreement, and supporting documents. Clearly explain the reasons for your disagreement with the demand notice.
  5. Attach Supporting Documents: Attach relevant documents to substantiate your claim and prove that the demand is incorrect. This could include revised computation of income, TDS certificates, or any other relevant proof.
  6. Verify and Submit: Review all the information and documents you have provided to ensure accuracy and completeness. Once satisfied, click on the “Submit” button to send your response.
  7. Monitor the Response: After submitting your response, regularly check the portal for any updates or further communication from the Income Tax Department regarding your challenge.

Remember, it is essential to respond within the specified time frame to avoid any adverse consequences. If you are unsure about how to proceed or need expert advice, consult a qualified tax professional for assistance.

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