The dreaded tax demand
An Outstanding Tax Demand notice means the department believes you owe more tax for a given assessment year, perhaps a TDS mismatch, a disallowed deduction, or a calculation gap. It is best handled quickly, but calmly.
Verify before you pay (portal path)
- Log in at incometax.gov.in.
- Go to Pending Actions > Response to Outstanding Demand.
- Check the Assessment Year and amount.
- Download the intimation order to see why the demand was raised.
The cost of waiting
Unpaid demands attract interest at 1% per month under Section 220(2), and the department can adjust the demand against future refunds under Section 245 (Source: Income Tax Act, Sections 220 and 245).
Your response options
| Option | When to choose it |
|---|---|
| Demand is correct | You agree and will pay |
| Demand is partially correct | You agree with part only |
| Disagree with demand | You have proof of an error |
What you should do
If correct, pay via e-Pay Tax and keep the challan. If wrong (say a TDS certificate was ignored), choose Disagree, give a clear reason such as "TDS credit mismatched" or "Demand already paid", and attach proof.
Common mistake
Paying a demand that is actually wrong, just to make it disappear. Always download the intimation order and check the reason first.
How LastMinute ITR helps
LastMinute ITR reconciles Form 16, AIS, and 26AS before you file, which is the simplest way to avoid surprise demands. Start at /file, import at /file/import/documents, and reconcile at /file/import/mismatch.
LastMinute ITR is a companion tool, not affiliated with the Income Tax Department. You file and e-verify your return yourself on incometax.gov.in.