My refund is being set off against an old demand. What are my options?
A 30-day response window, and genuinely different responses depending on whether the old demand is actually correct.
Nothing here asks for your PAN
Figures checked against the official source on 13 August 2026. Income Tax Department, Respond to Outstanding Demand user manual This is an estimate for guidance, not a statement of what you owe.
Why your refund gets redirected to an old demand
Section 245 lets the department set off a refund you're due this year against tax you still owe from an earlier one, rather than paying it out and separately chasing the old demand. It's procedural, not a penalty, but the 30-day response window is real and the default outcome if you do nothing is the adjustment going through automatically.
What people get wrong about this
Assuming an old demand must be a mistake because it's from years ago. A gap of several years between the original demand and the refund it eventually gets matched against is normal, the department's systems check for outstanding demands going back a long way, not just the current or previous year.
Ignoring the notice because the amount looks small. Interest accrues on an unpaid demand at 1% a month, so a demand that looked trivial when first raised can be considerably larger by the time it surfaces again in a Section 245 intimation.
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