Section 245 Tax notice is issued by the income tax department to the assesses in whose return the IT Department feels that there’s an impressive demand from earlier years and a refund is claimed in another assessment year. If it is such a case as per section 245, the AO may adjust refund against the tax demand which is outstanding from the taxpayer.

In detailed words, Intimation under section 245 is received when:

  • A tax demand pending from the Income Tax Department and;
  • Taxpayer may have claimed a refund from IT Department in another Assessment Year.

The adjustment of refund and demand are often made only after an accurate notice is given to the taxpayer and an opportunity are getting to tend to the assessee to correct any mistake which could have occurred within the raising of the demand are often done under Section 245.

Time Period

The required period of time within which the taxpayer possesses to reply  for Section 245 tax notice is 30 days after the notice is being received and if the assessee does not reply then the adjustment would be completed. it’s advised to reply to the intimation under section 245 as soon possible.

Specimen of the Section 245 Tax Notice

section 245 tax notice

Steps to be taken


  • Check Past Records


The past records of the returns filed by you’re to be checked whether the number of demand is correct or not. If confused about the demand amount mentioned, you’ll consult an expert.

  • Response to the Notice

The precise details of your outstanding demand are often viewed on tax e-filing portal.

You can view the small print of your demand and may submit a response for the section 245 tax notice in response to Outstanding Tax Demand.

The three options that are available within the portal are: ‘Demand is correct’, ‘Demand is partially correct’ or ‘Disagree with the demand/Demand is incorrect’

(a)If the demand shown is correct:

  • In the option of outstanding demand, Select the ‘Submit response’ option then click on ’Agree with Demand’. Next, the demand will then be adjusted against the refund.
  • (b)If the demand shown is partially correct:In the option of outstanding demand, Select the ‘Submit response’ option then click on ’Demand is partially correct’. Then enter the number of Demand which is correct.
    For the a part of the demand that’s incorrect, follow the steps mentioned below in step 3.(c)If the demand shown is incorrect:
  • In the option of outstanding demand, Select the ‘Submit response’ option then click on ’Demand is incorrect’.
    Now give the reasons for your selection and fasten the relevant documents that are required to means that the demand is wrong in your view. These documents and thus the rationale given are getting to be reviewed by the concerned Department.


  • Wait for the decision

After replying to the notice, the taxpayer has got to await the action taken by the IT department. Usually, the Assessing Officer (AO) examines the reply and communicates with the CPC, Bengaluru. After this step, the method of refund and adjustment of the demand initiates, if any.

4. File Grievances

You can file grievances online through the e-filing portal if after the rectification of the return you’re not satisfied with the decision. After Login Click on Helpdesk>Submit Grievance>CPC then Select A.Y. and category of Grievance and file the grievance.

It may be noted that if you are not content with the action taken by the CPC/AO after you filed the grievance, then you can file complaint to income tax ombudsman.


A person is accountable to pay penalty and prosecution as per the provisions of the tax Act in conjunction with proceedings for recovery listed in Chapter XVII-D of the Income-tax Act, 1961 if he/she doesn’t pay the number of tax demand mentioned within the section 245 tax notice.

For non-payment of demand, an assessee is additionally vulnerable to pay interest at the speed of 1% for every month for the quantity of default in accordance with section 220(2) of tax Act.

For any help and assistance on ITR Filing feel free to consult the tax experts at LegalRaasta. You can do filling of the ITR yourself by our ITR software. take complete help from  CA’s experts on filing income tax return. You can also use the option of Business Return, Bulk Return or Revised Return Filing with LegalRaahi.