Reply to Intimation Notice U/s 245 of Income-Tax Act

What is an Income Tax Notice under Section 245?   

An Income Tax Notice under Section 245 of the Income Tax Act, 1961 is issued when the Income Tax Department intends to adjust a taxpayer’s refund for the current financial year against any outstanding tax demand from previous years. This process is called refund adjustment against past tax dues.

Before making such an adjustment, the Centralized Processing Centre (CPC) is required to inform the taxpayer and seek consent. The notice allows you to either agree or disagree with the proposed adjustment. This ensures that taxpayers are aware of the reason for refund reduction and have an opportunity to present their side before any action is taken.

If the old tax demand is genuine, the department can adjust the amount directly from your refund. However, often, the demand may arise due to clerical errors, outdated challans, double payments, or pending rectification requests. If you have already cleared the earlier dues or disagree with the claim, you must respond within 30 days from the notice date.

Ignoring this notice may result in the automatic adjustment of your refund without your confirmation, leading to loss of refund and potential mismatch in your tax records.

Timely response helps:

• Protect your legitimate refund from incorrect adjustments.
• Keep your Income Tax profile accurate and up to date.
• Avoid confusion or disputes during future return filings or assessments.

In short, replying to a notice under Section 245 is crucial to confirm whether the past demand is valid or erroneous and to ensure a smooth processing of your refund.

Who Needs to Reply to Section 245 Notice?  

• Individuals whose refund is being adjusted against an old tax demand
• Businesses receiving refund adjustment notifications
• Taxpayers who disagree with a past demand or have already paid it
• Anyone notified of a refund set-off under Section 245 of the Income Tax Act

Why Tax Intelligence? 

Tax Intelligence is a top business platform that offers company setup, compliance, and management consulting services in India and abroad. They make online GST return filing easy, fast, and affordable. It also assists with Income Tax filing, TDS, PF, and ESI returns.

How Tax Intelligence Helps?

• Notice Review: We review your Income Tax Notice Section 245 to identify refund adjustment details and verify old demand accuracy.
• Demand Verification: Our experts cross-check previous tax records and ensure no duplicate or outdated tax demand is being adjusted.
• Reply Drafting: We prepare a professional and compliant reply explaining your objection or agreement with the refund adjustment.
• Portal Filing: Tax Intelligence files your response directly on the Income Tax portal to ensure timely submission and acknowledgment.
• Refund Protection: Our experts prevent unnecessary refund deductions by verifying all pending demands before confirmation.
• Status Tracking: We keep you updated with response acknowledgment, refund credit status, and department clarification follow-ups.