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Section 245 Set Off of Refunds — Adjusting Refunds Against Outstanding Demand
Section 245 allows the department to set off a refund due to you against any outstanding tax demand. The AO must give prior intimation before making the adjustment.
Response Deadline
Respond to intimation as specified
Extension
Not available
New IT Act
Section 245
What Does This Notice Mean?
If you have a refund due for one year but an outstanding demand for another year, the department can adjust the refund against the demand. However, they must notify you before doing so.
Common Triggers
- Refund due for one AY while demand is outstanding for another AY
- Pending demand from assessment or reassessment
How to Respond
- 1Check if the outstanding demand is valid — it may be disputed or under appeal
- 2If demand is incorrect, file rectification or response on the portal
- 3If demand is under appeal with stay granted, inform the AO to not adjust refund
- 4Respond to the Section 245 intimation on the e-filing portal
Consequences of Non-Compliance
If you do not respond to the intimation, the department will proceed with the adjustment. The refund will be reduced by the outstanding demand amount.
Frequently Asked Questions
Can I stop the department from adjusting my refund under Section 245?
You can respond to the intimation and challenge the outstanding demand. If the demand is under appeal with stay granted, the refund should not be adjusted. File your response on the e-filing portal.
Related Sections
Received a Section 245 Notice?
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Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Always consult a qualified Chartered Accountant or tax professional for advice specific to your situation. AI-generated content should be reviewed by a professional before use.