When your refund gets trimmed
You expected Rs 20,000 but only Rs 5,000 arrives, with a note saying the rest was "adjusted against an outstanding demand". Here is what happened.
Section 245 explained
Under Section 245, the department can set off your current refund against tax you owe from earlier years, but only after sending you an intimation and giving you about 30 days to respond (Source: Income Tax Act, Section 245).
So the adjustment is legal, yet you get a chance to object first.
Your options when you get the notice
| Situation | What to do |
|---|---|
| Old demand is genuine | Do nothing; it is settled |
| You already paid it | Disagree, attach the old challan |
| Demand is a mismatch error | Disagree, give the reason |
Respond step by step (portal path)
- Log in at incometax.gov.in.
- Go to Pending Actions > Response to Outstanding Demand.
- Open the demand linked to the Section 245 intimation.
- Choose Agree or Disagree, with proof if you disagree.
- Submit within the deadline on the notice.
What you should do
Check the old demand year and amount immediately. If you already paid, upload that challan before the adjustment is finalised.
Common mistake
Ignoring the Section 245 intimation. Silence is treated as agreement, and the refund is adjusted automatically.
How LastMinute ITR helps
LastMinute ITR helps you file clean returns so old, error-driven demands do not pile up. 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.