What are valid grounds for objecting to Section 245 adjustment?

Demand already paid, incorrect demand with pending rectification, appeal pending with stay, demand is time-barred, demand amount revised downward, demand in error, or mismatch in the assessed person.

Can the department adjust refund against demands from different years?

Yes. Section 245 allows adjustment against demands from any assessment year. Pre-notice intimation and opportunity to be heard are mandatory before any adjustment is made.

How do I check outstanding demands?

Login to incometax.gov.in → My Account → Response to Outstanding Demand, or under e-Proceedings. All outstanding demands by year, section, and amount are listed. Address proactively before they affect refunds.

Section 245 Notice – Refund Adjustment Against Outstanding Demand: Response Services

Q: What is a Section 245 notice?

An intimation proposing to set off a pending refund against an outstanding tax demand before releasing it. Gives 30 days to agree or object. If no response, adjustment is made automatically.

Q: What if my Section 245 objection is rejected?

Challenge the underlying demand through Section 154 rectification or CIT(A) appeal. If demand is set aside, the excess adjusted amount is refunded with interest under Section 244A.

Expert Assistance for Responding to Section 245 Intimations Proposing Refund Set-Off Against Outstanding Income Tax Demands

Under Section 245 of the Income Tax Act, 1961, the Income Tax Department has the power to set off (adjust) a refund due to a taxpayer against any outstanding tax demand before releasing the refund. Before making such an adjustment, the department is required to send an intimation to the taxpayer proposing the adjustment and giving them an opportunity to respond. This communication is commonly referred to as a Section 245 notice. Taxpayers who receive this intimation have a limited window — typically 30 days — to either accept the proposed adjustment or file an objection with supporting reasons.

Many taxpayers receive Section 245 notices for demands that are disputed, already paid, under appeal, or even time-barred. If no response is filed within the prescribed period, the department proceeds to make the adjustment — effectively withholding the refund without further opportunity to object. Our professionals provide complete Section 245 response services, connecting with our Section 156 demand notice response, CIT(A) appeal, notice reply support, and income tax advisory.

Our Section 245 Notice Response Services

Outstanding Demand Verification

Comprehensive verification of the outstanding demand cited in the Section 245 notice — checking whether it has been paid, is under appeal, is covered by a stay order, is time-barred, or is otherwise not currently enforceable.

Formal Objection Filing

Preparation and online filing of a formal objection to the proposed adjustment through the income tax e-filing portal — with full supporting documentation — within the 30-day response window.

Refund Entitlement Analysis

Verification of the refund amount to ensure it is correctly computed and fully supported by TDS credits in Form 26AS and AIS — identifying any portion that may have been incorrectly captured.

Rectification Under Section 154

Filing of rectification applications for demands arising from computational errors, incorrect TDS credit processing, or other mistakes apparent from the record — the fastest remedy for incorrect demands.

Appeal Against Underlying Demand

Where the outstanding demand is disputed on merits, filing an appeal before CIT(A) under Section 246A — which also provides the strongest legal basis for objecting to the Section 245 adjustment.

Refund Recovery Follow-Up

After filing objections, tracking the department's response and pursuing release of the refund — including follow-up representations, portal grievance filings, and escalation if the objection is not processed timely.

Key Features of Section 245 Proceedings

Response window is typically 30 days from the intimation date — missing it leads to automatic adjustment
Objections can be filed on multiple grounds — demand already paid, under appeal, time-barred, or incorrect
A valid appeal pending with stay is one of the strongest grounds for objecting to the Section 245 adjustment
Outstanding demands can be checked through the Income Tax portal under the e-Proceedings or Demand & Refund section
Filing a Section 154 rectification for an incorrect demand is often the fastest way to get it removed before the refund is adjusted
If the refund is incorrectly adjusted, the taxpayer retains the right to challenge and recover it through appeal

Frequently Asked Questions

What is a Section 245 notice and how is it different from a demand notice?

A Section 245 notice is an intimation proposing to set off a refund due to the taxpayer against an outstanding tax demand — before releasing the refund. It is not a demand notice itself, but it relates to an existing outstanding demand. A demand notice under Section 156 is issued after an assessment to communicate a new tax liability. Section 245 is a set-off mechanism — it tells you that a refund you are expecting will be withheld to satisfy a prior demand. The intimation gives you 30 days to either agree to the set-off or object with reasons. If no response is given, the adjustment is made automatically.

What are the valid grounds for objecting to a Section 245 adjustment?

Valid grounds for objecting to the proposed adjustment include: (1) the outstanding demand has already been paid — submit payment proof with the objection; (2) the demand is incorrect and a rectification application under Section 154 has been filed or will be filed; (3) an appeal against the demand is pending before CIT(A) or ITAT and a stay has been granted; (4) the demand is time-barred and no longer recoverable; (5) the demand amount has been revised downward in a subsequent order and the correct figure is lower; (6) the refund and the demand relate to different persons (e.g., joint vs individual filing issues); or (7) the demand was raised in error. Each objection must be supported with specific documentary evidence.

Can the department adjust my refund against demands from different assessment years?

Yes. Section 245 gives the department the power to adjust a refund against outstanding demands from any assessment year — not just the year for which the refund relates. For example, if you have a refund for AY 2024-25 and an outstanding demand for AY 2019-20, the department can propose to adjust the AY 2024-25 refund against the AY 2019-20 demand. However, the notice must be sent and an opportunity to be heard must be given before any adjustment is made. The taxpayer can object to the adjustment on any of the grounds discussed above, including contesting the correctness of the older demand.

How do I check whether I have outstanding demands against which my refund might be adjusted?

Outstanding income tax demands can be viewed by logging into the Income Tax e-filing portal (incometax.gov.in) under My Account → Response to Outstanding Demand, or under the e-Proceedings section. All outstanding demands across all assessment years are listed, showing the year, section of assessment, amount, and current status. If you have a refund pending and see outstanding demands on the portal, it is advisable to proactively address them — either by paying the demand, filing a rectification, or filing a CIT(A) appeal before the department sends a Section 245 intimation. Our professionals can help you clear outstanding demands before they affect your refund.

What if my Section 245 objection is rejected — can I challenge the adjustment?

Yes. If your objection is rejected and the refund is adjusted against the outstanding demand, you retain the right to challenge the underlying demand — through rectification under Section 154 (for errors apparent from the record), appeal before CIT(A) under Section 246A (for assessment-based demands), or other applicable remedies. If the adjustment was made incorrectly despite a valid objection, you can also file a grievance on the Income Tax portal or approach the AO for redress. If the underlying demand is ultimately set aside or reduced in appeal, the excess amount adjusted will be returned as a refund with applicable interest under Section 244A.

Received a Section 245 Notice? Protect Your Refund — Respond Within 30 Days.

Our tax professionals will verify the demand, file your objection, and pursue release of your legitimate refund without delay.

F.A.Q.

What is GSTR-9 and why is it required?

GSTR-9 is an annual GST return that summarizes all transactions reported during the financial year. It is required to ensure proper reconciliation and compliance with GST laws.

Who is required to file GSTR-9?

All regular GST-registered taxpayers are required to file GSTR-9, except composition dealers, casual taxable persons, and non-resident taxpayers.

What is the due date for filing GSTR-9?

The due date is generally 31st December following the end of the relevant financial year, unless extended by the government.

What details are included in GSTR-9?

It includes details of outward supplies, inward supplies, input tax credit claimed, taxes paid, and adjustments made during the year.

Is GSTR-9 mandatory for all taxpayers?

GSTR-9 is mandatory for most regular taxpayers, but certain small taxpayers may get exemptions based on turnover thresholds notified by the government.

What happens if GSTR-9 is not filed on time?

Late filing may result in penalties and late fees, along with potential compliance issues or notices from GST authorities.