Did You Receive Intimation u/s 245 of the Income Tax Act?

Did you receive intimation under Section 245 of the Income Tax Act?” A question like this is enough to intimidate anybody. However, the point to be noted here is that such intimation does not necessarily need to be scary and can be easily handled by you from the ease of your home. All you have to do is understand the basics, meaning, and the reason behind the intimation.

• An intimation under Section 245 of the Income Tax Act is issued to adjust your tax refund with the tax liability .
• You can agree or disagree with the intimation issued
• You have to respond to the intimation within 30 days
• There are specific steps to respond to the intimation depending on your response

Intimation under Section 245 of the Income Tax Act is a formal notice issued by the Indian IT (income tax) Department informing you that your previous year’s pending tax dues are being adjusted by this year’s refund. Section 245 of the Income Tax Act allows the tax authorities to make the required adjustments against your pending dues.

An intimation is issued by the IT department in cases where you are eligible for a refund in a particular financial year but also have pending tax dues to be paid for a previous financial year.As per Section 245 of the Income Tax Act, The Assessing Officer (AO) issues the intimation and is authorised to adjust your refunds or a part of your refund against your previous dues. Simply put, Section 245 ascertains that all your pending dues with the government are cleared before issuing your refund. Also Read : Income Tax Act 1961: Chapters, Scope and More

Here are some of the key points to note:

• It empowers the AO to offset your previous year's dues with the current year's refunds.
• A part of the entire refund amount may be used by the official to offset your dues.
• You may choose to agree or disagree with the tax demand issued.
• You get a notice period of 30 days to respond to the intimation under Section 245 of the Income Tax Act. If you fail to respond within the stipulated time, your dues will be automatically adjusted against your refund by the AO without any further notice. Interest on the pending due amount for the assessment might be charged.

The main purpose of this intimation is to notify you of your pending dues and get them cleared on time. Hence, once you receive such intimation, it becomes your duty to respond promptly. Also Read : What to do when you receive a Letter of Intimation u/s 143(1) from the Income Tax Department?

Intimation under Section 245 of the Income Tax Act has provisions for you to agree or disagree with the demand made by the authorities.So, first, you need to check the details of the pending tax demand using the following steps:

• Select the given checkbox and the disclaimer on the response to the Outstanding Amount Page.
• Once this option has been selected, you can no longer choose to disagree with the tax demand
• Now, you must click the “Pay Now” button under the not paid yet option. An e-tax page will open up. You can make your tax payments here.
• You will receive a success message confirming the successful payment and a transaction ID for future reference.If the payment has been already made, Select “Yes” and add challan details.
• To add the challan details, you have to select: “Type of Payment”, punch in the challan amount, enter the BSR code and serial number select the payment date.
• Then click “Attachment” to upload the challan copy and click the ‘Save’ button.
• After all the Challan details, you must click the “Submit” button to submit your response to intimation under Section 245 of the Income Tax Act.
• You will receive a success message confirming the successful payment and a transaction ID for future reference.

• Click the “Add Reasons” option available on the response to the outstanding amount page.
• Select the reason (one or more) for your disagreement from the given options and click the “Apply” button. A list of disagreement reasons is given on the screen. You can choose one or more reasons from there.
• Now, you have to enter the appropriate details for every selected reason.
• A completed status is displayed against the reason you submitted the details.
• Now, you need to click on the “Pay Now” button available in the payment summary. An e-tax page will open up. You can make your tax payments here
• A new page-“Response to Outstanding Amount Page,” will open up. Click the “Submit” button to submit your response.
• Click the “Confirm” tab to confirm your response submission
• You will receive a success message confirming the successful payment and a transaction ID for future reference.

• Demand is correct- If you select this option, then you have to follow these steps:
• Disagree with Demand (either in full or part) – If you choose this option, you need to follow the under-mentioned steps:

• Log in to the official income tax department website with your user ID (Aadhar number, PAN number, etc.) and password.
• Under the tab ‘Pending Actions, ’ click ‘e-proceedings.’
• A new page will open. On this page, you will see a ‘Self’ button. Just click it and select ‘For your Action Tab.’ Having done that, click ‘View Notices
• Then click ‘Notice/Letter PDF.’ You can download a copy of your notice and verify the details. Having done that, click ‘Submit Response’ to reply to the notice issued.
• You can view your tax demand details and then select either of the three options available:
• Demand is not correct, but agree for adjustment- If you select this option, a message asking the reason for disagreement will appear on the screen. All you need to do is click the ‘Continue’ button, add your reason for disagreement, and move to the next step.

Also Read : Section 90, 90A, and 91 of the Income Tax Act

If you do not respond to the intimation received under Section 245 within 30 days, the pending tax demand will be adjusted with your refund. An interest on the demand will also be charged for the assessment year and it will be adjusted from the refund without your consent.

Don't get intimated by an intimation. Understand its purpose and respond to it accurately. Plan your taxes effectively to save more and reduce your tax liability as much as possible.