BI CFO / Notice Desk / Guide
Section 245: refund adjusted against an old demand
| What it is | Your refund will be set off against tax the department says you owe |
| Deadline | Usually 30 days to respond on the portal |
| Risk | Medium: your refund is reduced if you do not respond |
| Our fee to respond | ₹2,500 |
Send your notice to a CA Free first look within 1 working day.
Why you received it
Before paying a refund, the department checks for any outstanding demand against your PAN for earlier years. If it finds one, it proposes to adjust the refund against it under section 245.
Many of these demands are old, already paid, or already reduced on appeal or rectification but not updated in the system.
What to check
Open Response to Outstanding Demand on the e-filing portal and note the year, section and amount of each demand.
Check whether you paid it, whether it was reduced by rectification or appeal, or whether you never received the original order.
How to respond
- Agree if the demand is correct; the refund will be adjusted.
- Disagree with reasons and proof, such as a challan, a rectification order or an appeal order, if it is wrong.
- Partly agree if only part is correct.
- If no response is given, the department can adjust the refund in full.
Income tax notices about years up to tax year 2025-26 still cite the Income-tax Act, 1961, which is why most notices issued today use the familiar section numbers. Notices about tax year 2026-27 onwards cite the renumbered sections of the Income-tax Act, 2025; the process is broadly the same.
Common questions
The demand is from many years ago. Is it still valid?
Possibly, but old demands are often wrong. Check the original order and your payments before agreeing.
Can a demand under appeal be adjusted?
It can, unless a stay has been granted. Tell the department about the pending appeal in your response.
Got this notice?
Upload it and a CA tells you what it means, the deadline, the risk and the fixed fee to reply, within 1 working day. The first look is free. Send your notice to a CA.
Related guides
- Section 143(1) intimation: what it means and what to do
- Defective return notice under section 139(9)
- Section 148A notice: before your assessment is reopened
- Section 143(2) scrutiny notice: what happens next
- GST ASMT-10: discrepancies found in your returns
- GST DRC-01A and DRC-01: before a demand is confirmed
- GSTR-3A: notice for not filing GST returns
- GST registration query, suspension or cancellation notice
- TDS default notice under section 200A
General information as of October 2026, not advice on your case. Rules change; check the notice and current law, or ask us.