Income Tax Demand Notice: How to Respond Online

To respond to an income tax demand, log in to the e-Filing portal and open Pending Actions > Response to Outstanding Demand. You can accept the demand and pay it, or disagree in full or in part with reasons. If you do nothing, the portal says the demand is confirmed and adjusted against your refunds.

Key facts

The Income-tax Act, 2025 took effect on 1 April 2026. Demands for years before that date are still handled under the 1961 Act, according to the department’s FAQ on the new Act.

Where outstanding demands show up

A demand usually arrives in one of three ways:

• an intimation under Section 143(1) after your return is processed;
• a notice of demand under Section 156 after an assessment or rectification order;
• an intimation under Section 245 proposing to set a demand against your refund.

The department also sends an email and SMS to your registered contacts. Attached PDFs from CPC normally open with your PAN in lowercase followed by your date of birth as DDMMYYYY.

To see every open demand, log in and click Pending Actions > Response to Outstanding Demand. Open each entry to see the year and the order it comes from. Our page on responding to income tax notices covers notices that ask for information rather than money.

Check whether the demand is correct

Before you pay or dispute, open the order behind the demand and compare it with your return. Check these points:

1. Is the demand for a year you actually filed, and for the right PAN?
2. Does TDS in the order match Form 26AS and your Annual Information Statement?
3. Are your advance tax and self-assessment tax challans included, with the right BSR code, date and amount?
4. Did CPC disallow a deduction you are entitled to?
5. Has the demand already been paid, or already adjusted against a refund?
6. Is there a rectification or appeal already pending for the same demand?

Your answers decide the route. A missing challan or TDS credit is a rectification. A disagreement on law is an appeal. A demand you have already paid needs the challan added in your response.

Response options on the portal

1. Go to Pending Actions > Response to Outstanding Demand.
2. Find the demand and click Submit Response.
3. Choose Demand is correct or Disagree with the demand (either in full or in part).
4. If you disagree, click Add Reasons and select from the list. Choose Others to write your own reason.
5. Upload supporting documents, each up to 5 MB.
6. Click Submit, then Confirm, and note the Transaction ID.

The portal warns that once you mark a demand as correct, you cannot later disagree with it. If you disagree only in part, the FAQ says you should pay the undisputed portion.

Paying the demand

If you accept the demand, pay it online:

1. Log in and go to e-File > e-Pay Tax.
2. Click New Payment.
3. Click Proceed on the Demand Payment as Regular Assessment Tax (400) tile.
4. Select the assessment year and click Continue.
5. Enter the tax, interest and other amounts, then click Continue.
6. Choose net banking, debit card, payment gateway, NEFT/RTGS or pay at bank counter.
7. Download the challan receipt.

Then go back to Response to Outstanding Demand, choose Demand is correct, and add the challan details. If you paid earlier, select the option for an already-paid demand and upload the challan PDF.

Disagreeing: reasons and documents

A disagreement works best when it points to a record. Keep these ready:

• challan receipts for tax you have already paid;
• Form 16 or Form 16A for TDS not credited;
• a copy of a rectification request or appeal already filed;
• an order that reduced or deleted the demand.

If the mistake is in CPC’s processing, also file a rectification request under Services > Rectification. The portal FAQ allows this within 4 years from the end of the financial year in which the order was passed. For a genuine dispute over an assessment, file an appeal in Form 35 before the Commissioner (Appeals) within 30 days of the demand notice. The appeal fee is ₹250, ₹500 or ₹1,000, depending on the assessed income.

Interest, adjustment and stay of demand

Interest under Section 220(2)

If you do not pay within the time in the notice of demand, simple interest of 1% a month runs on the unpaid amount, as Taxmann explains. The interest keeps running while you ignore the demand.

Adjustment against refunds under Section 245

The department can set an outstanding demand against a refund for any year. It first sends an intimation. DisyTax notes that the adjustment goes ahead if you do not reply within 30 days. Check the status on the refund status page if a refund shows as adjusted.

Stay of demand during an appeal

Filing an appeal does not stop recovery on its own. You can ask the Assessing Officer for a stay under Section 220(6). CBDT’s Office Memorandum of 31 July 2017 says a stay should normally be granted on payment of 20% of the disputed demand while the first appeal is pending. Earlier, under the 29 February 2016 memorandum, the figure was 15%. The change is summarised by itatonline.org.

Demands linked to assessments or appeals can turn on legal points, so a chartered accountant is worth consulting before you file a disagreement or seek a stay.

To estimate the tax you should have paid, use the income tax calculator.

Frequently asked questions

How do I view my income tax demand?

Log in to the e-Filing portal and open Pending Actions > Response to Outstanding Demand. Every open demand is listed with its year and amount.

What is the password for an income tax demand notice PDF?

For CPC documents it is usually your PAN in lowercase followed by your date of birth as DDMMYYYY, with no spaces.

What happens if I do not respond to an outstanding demand?

The portal says the demand is confirmed and adjusted against any refund, or shown as payable. Interest under Section 220(2) can also run.

Which challan do I use to pay a demand?

Use e-Pay Tax and choose Regular Assessment Tax (400) for the right assessment year.

Can I change my response after choosing “Demand is correct”?

No. The portal does not let you disagree with a demand once you have marked it correct.

Do I have to pay while my appeal is pending?

Unless a stay is granted, the demand remains recoverable. Under the CBDT guidelines, a stay is usually given on payment of 20% of the disputed amount.

Sources

• Respond to Outstanding Demand user manual — Income Tax Department e-Filing portal (checked 16 Sep 2026)
• Respond to Outstanding Demand FAQ — Income Tax Department e-Filing portal (checked 16 Sep 2026)
• Payment of Demand without DRN user manual — Income Tax Department e-Filing portal (checked 16 Sep 2026)
• Raise Rectification Request FAQs — Income Tax Department e-Filing portal (checked 16 Sep 2026)
• Form 35 FAQ — Income Tax Department e-Filing portal (checked 16 Sep 2026)
• Objective and scope of the New Act FAQ — Income Tax Department e-Filing portal (checked 16 Sep 2026)
• Interest under Section 220(2) — Taxmann (checked 16 Sep 2026)
• CBDT modifies guidelines for stay of demand — itatonline.org (checked 16 Sep 2026)
• Section 245 refund adjustment — DisyTax (checked 16 Sep 2026)
• Section 143(1) intimation password — ClearTax (checked 16 Sep 2026)