Timely Response : Know the Steps to Respond to intimation under Section 245 of the Income Tax Act
Understanding Section 245 of the Income Tax Act
Intimation under Section 245 is a formal notice issued by the Income Tax Department to inform taxpayers that they are adjusting a previous year's pending tax payable with the current year's refund. Section 245 of the Income Tax Act grants the department the authority to make such adjustments. However, it is a mandatory requirement for the department to send an intimation under Section 245 to the taxpayers before proceeding with the adjustment. This notification allows taxpayers to respond and express their agreement or disagreement with the proposed adjustment.
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Most Asked Questions
Let's consider a scenario involving Mr. Ramesh Kumar to illustrate the impact of Section 245 of the Income Tax Act. In the financial year 2015-16, Mr. Kumar faced a tax demand of Rs 30,000, which he contested through a rectification request under Section 154, believing the matter was resolved. Fast forward to the financial year 2019-20, Mr. Kumar filed his return with an anticipated refund of Rs 20,000.
To his astonishment, he received an intimation under Section 245, revealing that his expected refund was being adjusted against the outstanding demand from the financial year 2015-16. This unexpected development stirred memories of his previous challenge with the demand, prompting Mr. Kumar to revisit the issue. The situation highlights how the Income Tax Department exercises its authority under Section 245, emphasising the need for taxpayers to respond to such intimations to seek resolution promptly.
Time Limit to respond intimation u/s section 245
The time limit to respond to an Intimation under Section 245 of the Income Tax Act is typically 30 days from the date of receiving the intimation. It is essential to submit your response within this stipulated timeframe to ensure that your concerns or agreements are considered by the Income Tax Department.
Failure to respond within the specified period may result in the automatic adjustment of the outstanding demand mentioned in the intimation against any eligible refund.
Steps to Respond to Intimation under Section 245
1. If You Agree with the Outstanding Demand:
Step 1: Login: Visit https://www.incometax.gov.in/iec/foportal/ and log in using your user ID and password.
Step 2: Navigate to Pending Actions: Go to the "Pending Actions" tab.
Step 3: Access Response to Outstanding Demand: Select "Response to Outstanding Demand."
Step 4: Submit Response: Choose "Submit Response.
Step 5: Confirm Demand is Correct: Select "Demand is correct."
Step 6: Submit: Click on "Submit."
Step 7: Verification: Verify that your submission has been successfully recorded.
2. If You Do Not Agree or Partially Disagree with the Outstanding Demand:
Step 1: Login: Visit https://www.incometax.gov.in/iec/foportal/ and log in using your user ID and password.
Step 2: Navigate to Pending Actions: Go to the "Pending Actions" tab.
Step 3: Access Response to Outstanding Demand: Select "Response to Outstanding Demand."
Step 4: Submit Response: Choose "Submit Response.
Step 5: Disagree with Demand: Select "Disagree with demand (Either in full or part)."
Step 6: Submit: Click on "Submit."
Step 7: Provide Reasons: Submit the reasons for your disagreement, such as "Demand Paid," "Demand already reduced by rectification/revision," "Appeal has been filed," etc.
Step 8: Submit Reasons: Provide additional details as required.
Step 9: Verify that your submission, along with your reasons, has been successfully recorded.
Step 10: Follow Up: Keep track of your response and follow up with the Income Tax Department if necessary.
Reason for issuing Intimation u/s 245
The Income Tax Department issues an Intimation under Section 245 primarily to adjust any outstanding demand from a previous assessment year against the current year's refund. This adjustment is carried out when the taxpayer has a pending tax liability from a prior year and an available refund in the current year. The department uses this mechanism to settle dues, ensuring compliance with the taxpayer's outstanding obligations.
The specific reasons for issuing such an intimation may include discrepancies in tax payments, unadjusted demands, or outstanding tax dues that have not been met through regular assessment procedures. It serves as a means for the Income Tax Department to reconcile past and current tax liabilities.
How to Check Outstanding Demand for Adjustment:
To verify any outstanding demand for adjustment, taxpayers can follow a straightforward process on the Income Tax e-Filing Portal. Here's a step-by-step guide:
Log In to the Income Tax e-Filing Portal:
Begin by accessing the official Income Tax e-Filing Portal at www.incometax.gov.in. Use your user ID and password to log in.
Navigate to 'View Returns/Forms':
Once logged in, locate and select the 'View Returns/Forms' tab prominently displayed on the portal dashboard.
Select 'Income Tax Returns':
Click on 'Income Tax Returns' from the available options to access details related to your filed returns.
Choose the Relevant Assessment Year:
Within the 'Income Tax Returns' section, opt for the specific assessment year for which you wish to review the details.
View e-filed Returns/Forms:
Identify and click on the acknowledgement number associated with the desired assessment year to view the e-filed returns/forms.
Check Outstanding Demand:
Once inside the detailed view of the chosen assessment year, carefully examine the information provided to identify any outstanding demand or tax payable for that particular year.
Review Intimation under Section 245:
Additionally, if you have received an Intimation under Section 245, scrutinise the document for specific details regarding the outstanding demand and the proposed adjustment against the refund.
Consequences of failing to respond to an Intimation under Section 245
Failure to respond to an Intimation under Section 245 of the Income Tax Act within the specified timeframe can have several consequences for the taxpayer. Here are some potential outcomes:
1. Automatic Adjustment: If a taxpayer does not respond within the stipulated period, the Income Tax Department may proceed with the automatic adjustment. In such cases, the outstanding demand mentioned in the intimation is likely to be automatically adjusted against any eligible refund for the current assessment year.
2. Increased Tax Liability: Non-response may lead to an increase in the taxpayer's overall tax liability as the outstanding demand from a previous year remains unresolved and may continue to accrue interest and penalties.
3. Legal Actions: Persistent non-compliance with tax obligations, including outstanding demands, may prompt the Income Tax Department to take legal action. This could involve initiating recovery proceedings, attachment of assets, or other legal measures to recover the outstanding dues.
Know Your Jurisdictional Assessing Officer
To determine your jurisdictional Assessing Officer (AO) in India, you can conveniently utilise the "Know Your Jurisdictional AO" feature on the official website of the Income Tax Department at http://www.incometax.gov.in/.
Step 1 involves logging into your account using your user ID and password. Once logged in, proceed to Step 2 by selecting 'My Profile' in the Profile Icon section. In Step 3, click 'Jurisdiction Details,' leading you to a screen displaying comprehensive information about your Assessing Officer. This user-friendly interface simplifies locating your jurisdictional details, providing transparency and ease of access.
When it comes to responding to the Assessing Officer, the online platform streamlines the process, eliminating the need for additional compliances unless explicitly requested by the Income Tax Department. This means that, without specific instructions, responding to the Assessing Officer can be seamlessly accomplished through the online system. The portal's design ensures a straightforward and efficient interaction, offering taxpayers a convenient means of managing their responses to the Income Tax Department.
FAQ
Q1. What is Section 245 Intimation under the Income Tax Act?
Section 245 Intimation is a notice issued by the Income Tax Department to adjust a previous year's outstanding demand against the current year's refund.
Q2. How can I check if there is an outstanding demand against my refund?
Log in to the Income Tax portal, select 'My Profile,' and click on 'Jurisdiction Details' to view information about your Assessing Officer, including any outstanding demand.
Q3. How is a refund adjusted against an outstanding demand?
If there's an outstanding demand, the Income Tax Department may automatically adjust the refund amount to settle the pending dues.
Q4. Can I respond to the Section 245 Intimation online?
You can respond to the Intimation online through the Income Tax portal. Respond within the stipulated time to avoid automatic adjustments.
Q5. What are the consequences of not responding to the Section 245 Intimation?
Non-response may lead to the automatic adjustment of the outstanding demand against your refund, potentially resulting in increased tax liability.
Q6. Is there a penalty for having an outstanding demand?
While there may not be a specific penalty for having an outstanding demand, interest may accrue on the unpaid amount.
Q7. If the amount specified in any notice of demand is not paid within 30 days of service, what are the consequences for the assessee, and how is the interest calculated?
If the amount specified in the notice of demand is not paid within 30 days of service, the assessee becomes liable to pay a simple interest. The interest is calculated at the rate of 1% for every month or part thereof. The period for which interest is applicable ranges from the due date mentioned in the notice until the actual payment is made.
Q8. When is the due date for filing an income tax return in India?
The due date for filing an income tax return in India is usually July 31st of the assessment year. However, this date may be extended by the government in certain circumstances.
Q9. Can I file a rectification request for a demand raised in a previous year?
Yes, you can file a rectification request under Section 154 to correct errors in the income tax return, which may impact the demand raised in a previous year.
Q10. How can I check the status of my income tax refund?
Visit the Income Tax portal, navigate to 'My Account,' and click on 'Refund/Demand Status' to check the real-time status of your income tax refund.
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