How to Pay an Outstanding Income Tax Demand (and Dispute It)
Last verified: June 2026, against the Income Tax Act and related provisions cited below. Figures apply to FY 2025-26 (AY 2026-27). General information, not personal tax advice.
Received a message that you have an outstanding tax demand? It means the department has computed more tax than you paid — often via a Section 143(1) intimation or an assessment. Don’t panic, but don’t ignore it either. Here is how to view, agree with, dispute, or pay a demand.
Step 1: view the demand
Log in to the income-tax e-filing portal and open Pending Actions → Response to Outstanding Demand. It shows the assessment year, the amount, and the section under which it was raised.
Step 2: agree or disagree
- If you agree: pay the demand (next step). You can also let it be adjusted against a refund.
- If you disagree: submit a response selecting “Disagree with demand (either in full or part)” and give reasons — for example, TDS credit not considered, challan not matched, or a processing error. You may also file a rectification under Section 154 if it is an apparent mistake.
Step 3: pay the demand
Use e-Pay Tax on the portal. Select the relevant assessment year and the correct head — for a demand after processing/assessment, tax is paid under “Tax on Regular Assessment (Minor Head 400)”. After payment, the challan reflects against the demand and it is closed.
Watch for Section 245 adjustment
The department can adjust an outstanding demand against a refund due to you under Section 245 — but it must give you notice and around 30 days to respond first. If you have a genuine dispute, respond within that window rather than letting the refund be set off automatically.
Interest on delay
Unpaid demands attract interest under Section 220(2) at 1% per month until paid, so resolve agreed demands promptly.
FAQs
Where do I see my tax demand?
Under “Response to Outstanding Demand” in the Pending Actions section of the e-filing portal.
Under which head do I pay a demand?
“Tax on Regular Assessment” (Minor Head 400) via e-Pay Tax, for the relevant assessment year.
Can the department take it from my refund?
Yes, under Section 245, after giving you notice and an opportunity to respond.
What if the demand is wrong?
Submit a “Disagree” response with reasons, and/or file a rectification under Section 154.