After filing the Income Tax Return (ITR), taxpayers usually get the refund in 4-5 weeks. But in many cases, notice under Section 245 is issued by the Income Tax Department. This means that a taxpayer’s refund may be reduced or the entire refund may be adjusted against old tax dues.
What is Section 245 notice IT Refund Alert
Under Section 245 Income Tax Department has the right that if a taxpayer has outstanding tax of the previous assessment year, it can be adjusted from the refund of the current year. In such a situation, a notice is first sent to the taxpayer.
Refund may be stopped due to these reasons
Major reasons for reduction or withholding of refund include outstanding tax, wrong ITR filing, difference in TDS or tax credit and new tax demand created after assessment.
Reply immediately after receiving notice
On receiving notice under Section 245, it should not be ignored. The taxpayer usually has to log in to the Income Tax Portal and respond to the ‘Response to Outstanding Demand’ within 30 days. If the demand of the department is correct then it can be accepted, otherwise objection will have to be lodged with the necessary documents.
These documents will have to be given in case of disagreement IT Refund Alert
If the taxpayer does not agree to the demand of the department, then he will have to submit Form-16, Form-26AS, AIS, TIS, investment related documents, tax payment challan, details of capital gains and other records including previously filed returns.
Full refund can also be adjusted
If the tax outstanding is more than the refund, the taxpayer may have to pay additional tax even after the entire refund is adjusted. Therefore, it is important to respond to notices on time and keep tax records updated.
Comments are closed.