If you pay less tax than what you are supposed to while filing income tax return then while assessing the Income Tax Return ,you might be asked to pay the outstanding demand. Income Tax Department sends the intimation under Section 143(1) asking for outstanding demand along with the calculations as to why Income tax department thinks you need to pay more tax. You can go through the calculations and pay the outstanding tax if you agree or you can reject the Outstanding demand. This article talks in detail about how to pay or reject the Outstanding Income Tax that one receives under section 143(1).
What is Assessment of the Income Tax Return?
Every taxpayer has to furnish the details of his income to the Income-tax Department by filing up his return of income. Once the return of income is filed up by the taxpayer, the next step is the processing of the return of income by the Income Tax Department for its correctness. The process of examining the return of income by the Income Tax department is called as Assessment.
Under the Income-tax Law, there are four major assessments as given below:
- Assessment under section 143(1), i.e., Summary assessment without calling the assessee.
- Assessment under section 143(3), i.e., Scrutiny assessment.
- Assessment under section 144, i.e., Best judgment assessment.
- Assessment under section 147, i.e., Income escaping assessment.
Our articlesAfter e-filing ITR: ITR-V,Receipt Status,Intimation u/s 143(1) and Income Tax Notice :Sections,What to check,How to reply discusses various types of Assessments in detail.
Who processes the electronically filed returns?
Electronically filed Income tax returns are processed by Central Processing Center,CPC at Bengaluru. The Infosys team set up an IT-CPC,a centralized processing center for all IT-related processes where all the filed returns were directed validated, scanned, digitized, processed, and printed.The CPC was set up in February, 2009 and Infosys Technologies Ltd was appointed for a period of 5 years as the technology partner and was paid Rs 250 crore for the five-year contract. In Dec 2014 contract for the Centralized Processing Centre (CPC) of the Income Tax (I-T) Department at Bangalore to Infosys was extended by two years up to September 2017.
Earlier all the Income tax returns were assessed by Assessing officers. Now only some cases are referred to Assessing officers.
What is Intimation under the section 143(1)?
Three types of notices are sent under section 143 (1)
- Intimation where the notice is to be simply considered as final assessment of your returns when the return filed by you matches his computation. Nothing is to be done on part of the taxpayer. Keep it with your income tax papers.
- Processing under section 143 (1) would make you eligible for a refund. If you are getting Refund, wait for the transfer into your account.
- Notice of demand where the officer’s computation shows shortfall in your income tax payment for the said financial year.If there is a tax demand then this intimation becomes Notice of Demand under section 156. The notice says “In case of Demand, this intimation may be treated as Notice of demand u/s 156 of the Income Tax Act, 1956. Accordingly, you are requested to pay the entire Demand within 30 days of receipt of this intimation”
Assessment under section 143(1) can be made within a period of one year from the end of the financial year in which the return of income is filed.
Till what Outstanding tax demand we can ignore?
If Outstanding tax demand is less than Rs 100 (or refund is less than Rs 100) then one can need not pay the outstanding demand. In case of refund one will not get the refund if refund amount is less than Rs 100. It will be adjusted in future ITRs.
Table of Contents
How to reply to notice received under section 143(1)?
Ascertain the nature of Income Tax Demand: First and for most thing, you have to ascertain the reason for raising demand. You will get the information from Intimation received u/s 143(1) of Income tax Act.
If you have outstanding tax demand at the end of the notice you would see the Net Amount Payable as shown in image below
- Understand the motive of serving the notice.
- Check the given details of notice, i.e., your name, address, PAN, etc.
- Check the validity of the notice as well as the duration within which you have to respond
- Check calculations. It would be explained in two columns yours and how Income Tax Calculated it, as shown in image below from our article Understanding Income Tax Notice under section 143(1)
If you have not received intimation u/s 143(1) you can visit Income Tax E-Filing Website and request for re-sending of Intimation u/s 143(1) / u/s 154 .
How to check Outstanding demand details on Income Tax website
You can check Outstanding demand and details by Logging in to the Income tax website and Click on My Account and then Outstanding Tax Demand as explained in Notice for Adjusting Refund Against Outstanding Tax Demand, Section 245. details displayed are: Assessment Year, Section Code, Demand Notification Number, Date on which demand is raised, Outstanding Demand amount
- How do I know about the reason for such demand when I don’t have the notice for the same?
- Log in to income tax e-filing portal Income tax efiling website.
- On the top Navigation Blue Bar go to My Account Section
- From on My Account Section,drop down menu, select Request for Intimation u/s 143(1)/154 as shown below
- Select the appropriate Assessment Year from the drop down .(For the financial year 2009-10 the Assessment Year will be 2010-11)
- Now Select the Category– Intimation u/s 143(1). The other category is Rectification u/s 154.
- Sub-category will automatically become Resend by e-mail. It would be sent to your email id on income e-filing portal. You can update your e-mail id through Profile settings section on top blue navigation bar .
- Now enter the captch code and submit the request.
- You will receive a confirmation mail from CPC the same day and the intimation with in 5-6 days of your submitting the request in your registered e-mail id.
- If you do not receive the intimation with in 5-6 days you can track the status of request by logging on to your e-filing account and clicking on the My Request List Tab on the top blue navigation bar of your account. A screen will appear,shown in image below. Select the type of request and Submit. Status of your request will show .
How to respond to Income Tax Outstanding Demand Notice?
If you have received an Income Tax Demand then you have two choices, one to accept and Pay the demand , other choice is to reject the demand. It is based on the Income Tax tutorial Response to Outstanding Tax Demand (pdf format)
Step 1 Login to www.incometaxindiaefiling.gov.in with user ID, password, date of birth.
Step 2 Click on E-file and go to Respond to Outstanding Tax Demand . The following details are now displayed :Assessment Year, Section Code,Demand Notification Number,Date on which demand is raised, Outstanding Demand amount, Uploaded by,Rectification rights, Response, Submit and View
To submit the response click on Submit and select one of the following option : Demand is Correct, Demand is Partially Correct and Disagree with Demand
How to proceed if you agree and want to pay Outstanding Tax Demand?
If you select Demand is correct, then a pop up is displayed as “If you confirm „Demand is correct‟ then you cannot „Disagree with the demand‟. Click on Submit if this is ok with you.
A success message shall be splashed on your screen.
- If any refund is due, the outstanding amount along with interest will be adjusted against the refund due.
- In any other case you must repay the demand immediately.
Click on E-Pay Tax to pay the taxes online. This will take you to Tax Information Network (TIN) website.
- Select Challan 280 for paying your Income Tax Due. Our Article Paying Income Tax Online, epayment: Challan 280 explains with pictures in detail.
- Choose appropriate Assessment Year . Please be careful in filling the Assessment Year.
- For individuals making tax payments, select (0021) INCOME-TAX (OTHER THAN COMPANIES) under tax applicable
- Fill in your PAN and Assessment Year correctly.
- Fill in the address, phone number and email address
- Fill in the Bank Name and Captcha Code
- Under Type of payment section Select 400:Tax on Regular Assessment . Other options are (100) ADVANCE TAX : For regular advance tax payments or 300 SELF ASSESSMENT TAX if you are paying taxes after the financial year has ended.
- You will be redirected to the Net banking page. Please check the information entered here. You can enter the total income tax to be paid in the income tax field. You can leave surcharge, education cess, interest and penalty blank. You can check your intimation to get the details like Interest Payable,Surcharge.
- Get the BSR code and challan number
What to do after paying the outstanding tax demand?
You check the status of your tax payment by viewing Form 26AS and Select the specific Assessment Year. Go to Part C – Details of Tax Paid. There should be an entry with the details of your Outstanding Income Tax Demand payment.
Whom to inform after making payment of Tax against a demand notice?
In case the demand notice is from CPC Bangalore no further communication will be required. Demand will automatically be adjusted with the tax payments made. You can check the status of demand by logging in to Income Tax e-filing portal after few days of making payment. Go to “Outstanding Tax Demand” and check the status. If your payment is received by the IT department then you may find no records.
If the notice of demand is served upon you by the Jurisdictional Assessing Officer, you must write request to the Assessing Officer to delete the demand mentioning therein the details of tax payments made by you and attaching therewith the copy of tax payment Challan.
How to proceed if you feel Demand is partially correct?
If you think Demand is partially correct, then two amount fields will be available and also fill in one or more reasons as to why the demand is incorrect, as shown in image below.
- Amount which is correct – Enter the amount which is incorrect. If the amount entered here is equal to the demand amount, then one pop is displayed “Since the amount entered is equal to outstanding demand amount, please select the option “Demand is correct”
- Amount which is incorrect: Amount is auto filled which is the difference between the outstanding amount and Amount which is correct.
- Fill in the reasons as to why demand is incorrect
- Based on the reason selected, one needs to provide additional information as per the below table.
- Demand has already been paid : Provide the CIN (Challan Identification Number). Also mention BSR Code, date of payment, serial number of challan and amount. You can also add your comments under ‘remarks’. Or if CIN is not available mention that demand has been paid by challan has no CIN. And mention date of payment, amount, and remarks (your comments) if any.
- Demand has already been reduced by rectification/revision : Provide date of order, demand amount, details of AO who has rectified. And then upload rectification/appeal effect order passed by AO.
- Demand has already been reduced by Appellate order but appeal effect has to be given by the department : Provide, date of order, appellate order passed by (details of CIT(A) etc). Reference number of order.
- Appeal has been filed : Stay petition has been filed or stay has been granted by or installment has been granted by . Also provide date of filing of appeal, appeal pending with (details of CIT(A) etc) Stay petition filed with (details of office). If stay has been granted, you have to also upload the copy of Stay Order.
- Rectification/ Revised Return has been filed at CPC : Provide Filing Type, E-filed acknowledgement number, Remarks (comments, if any of the tax payer), Upload challan copy,Upload TDS Certificate,Upload letter requesting rectification copy,Upload Indemnity Bond
- Rectification has been filed with Assessing Officer :Mention the date of application and remarks (comments, if any of the tax payer).
How to proceed if you disagree with Outstanding Tax Demand?
If you Disagree with the Demand then you must furnish the details of your disagreement along with reasons. The details/reasons are the same as the mentioned above under ‘demand is partially correct’.
After submitting a response the success screen would be displayed with the transaction ID as shown in image below.
One can click on View link under Response column to view the response submitted. The following details are displayed: S. No. Transaction ID – A hyper link, Date of Response, Response Type
One can click on Transaction ID to know the details of response submitted.
- Demand position gets updated every day
- If demand is shown to be uploaded by AO in the above table, rectification right is with Assessing Officer, please contact your jurisdictional Assessing Officer for the same.
- For the demand against which there is No Submit response option available such demand is already confirmed by the Assessing Officer. Kindly contact your
Jurisdictional Assessing officer.
I hope this post is useful and informative. We have personally not paid the Outstanding Tax demand, so if you find anything missing or incorrect please do let us know. Have you received Income Tax demand notice? How did you deal with it? Did you pay the taxes online or offline? Please share your comments.