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Income Tax Notice under Section 245

 There are a lot of taxpayers who are receiving intimation from the Income Tax Department under Section 245 of the Income Tax Act but they are often not able to understand the situation and what this actually means for them. In many cases the mere mention of some intimation from the tax department is enough to scare the taxpayer but this kind of step might require some quick action from the side of the investor and they have to pay attention to the details. There are now options to ensure that the right effect is given to the various conditions and the taxpayer does not end up suffering at the end of the day. Here is a look at the entire situation and how a taxpayer can respond to this kind of situation.

Meaning of intimation

The Income Tax Act allows the tax authorities to set off a refund that has to be paid by the tax department against some previous outstanding tax amount that the taxpayer has to be paid. However this does not mean that any adjustment can be done without the knowledge of the taxpayer. Under Section 245 this kind of adjustment can be done only after a proper notice is given to the taxpayer and they are given an opportunity of correcting any mistake that might have occurred in the raising of the demand. The intimation that is being received by the taxpayers is due to this condition wherein they are being informed that their current years refund is being adjusted against some past outstanding.

First step

The moment such intimation is received from the tax department the taxpayer has to first check the details of the previous outstanding tax demand against which the refund is being adjusted. This is significant because of the fact that it is not necessary that every past demand raised is correct. There have been a lot of cases wherein the demand raised have not been proper and hence the taxpayer does not have to pay this amount so this has to be taken care of. This will require some work on the part of the taxpayer because the previous demand can stretch back several years and to get the exact situation will require that the old details be looked at once again.

Time period

The intimation under Section 245 will also mention the time period during which the taxpayer has to respond after which if there is no reply then the adjustment would be completed. This time period is important and the earlier the reply is filed by the tax payer the better it is. In the online filing website the taxpayer will have to log in and under the e file segment they will need to go to the response to outstanding tax demand section. Here one can view the details of the demand and the reply can also be submitted here which can be under three heads. This would be that the demand is correct or it can be demand is partially correct and the third head is you disagree with the demand. There will be a way to reply to the outstanding demand but if this facility is not present then the meaning of the step is that the demand has already been finalised by the assessing officer. Since there is a specific time period that is allowed for the reply of the tax payer it is important for them to adhere to this as the facility for replying could then close which would end the matter. This is also the reason why every intimation needs to be seen immediately and then action taken in the matter.
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