Outstanding tax dues get adjusted from tax refunds claims, if any
Once you file your income tax return (ITR), the income tax department processes it, and sends various emails to update you. Typically, emails come from central processing units of the tax department from the email ID email@example.com, with the subject ‘intimation’ under section (U/S) so and so. Each intimation email can be different from previous emails. Typically, upon processing the return, the tax department sends an intimation under section 143 (1) of the Income Tax Act, 1961, which reflects the income details that you have provided in the return versus the income computed by the department. If there is any discrepancy, you might have to respond. However, even if there is no discrepancy, you may receive other intimations, one of which could be under section 245 of the Act. Let’s read more about what such an intimation means what it means and what you need to do if you receive such intimation email from the tax department.
Intimation under section 245
You will receive intimation under this section only if there is a tax demand pending from previous assessment years (AYs) and you have claimed a tax refund in the latest return. The email's wording goes something like this: “Your return has been processed at CPC. The refund determined will be adjusted against the outstanding demand as shown in 'Outstanding Demand table' annexed herewith.”
There will also be details of tax demand such as the AY for which the outstanding demand is there, under which section the demand has been raised, a demand identification number, its date and amount, and who to contact for rectification.
How to respond to the communication
In case you agree to the tax demand, you can login to your e-filing account on www.incometaxindiaefiling.gov.in. Go to ‘e-file’ tab, where you will find an option for 'Response to outstanding demand', where you can submit your responses by clicking on 'Demand is correct'.
If you do not agree or only partially agree with the tax demand, you will have to file your responses or reason for the same. To do so, if the demand is uploaded by an assessment officer (AO), you may give your response and reason for why you disagree to the jurisdictional AO. (To find out who your AO is, read here.) If the demand is uploaded by the CPC, you can file a revised return or rectification request through the e-filing account.
If you do not respond to the intimation or do not take any action in 30 days of a notice that has come under the section 245, the outstanding demand as on that date will be considered for adjustment against your refund. So, if you have a tax refund claim of, say, Rs50,000, and there is an outstanding tax due of Rs20,000 from previous assessment year, the tax department will adjust the Rs20,000 from the Rs50,000 and refund Rs30,000 to you. So, do respond to the tax department