Overview

Both people and corporations may find it intimidating to receive an income tax notification. To guarantee adherence to the Income Tax Act, it is imperative to comprehend the intent and consequences of these notifications. One such notification is sent in accordance with the Income Tax Act's Section 156, which deals with unpaid tax claims. We will examine the specifics of Section 156 in this post, along with advice on how to react to an income tax notification, when you have to answer, and what happens if you wait.

Section 156: What is it?

The Assessing Officer (A.O.) may issue a notice of demand pursuant to Section 156 of the Income Tax Act in cases where the taxpayer is required to pay any taxes, interest, penalties, fines, or other amounts as a consequence of an order made under the Income Tax Act. The notification details the amount owed and the payment date, which is usually 30 days after the notice is received.

Notifications for sum payable under Sections 143(1), 200A(1), and 206CB(1) must be understood to be considered notices of demand under Section 156.

How Should I Answer a Notice of Outstanding Demand?

You can choose to accept or reject a demand that you receive in accordance with Section 156 when it comes to outstanding demands. Through the income tax e-filing portal, the Income Tax Department offers a simplified procedure for answering to such notices. The actions to take are as follows:

• Demand is accurate.
• Partially, the demand is true.
• Contradict the demand.
• Although the demand is incorrect, it accepts modification

Steps to Respond:

1. Enter your User ID and Password to log in to your income tax e-filing portal.
2. Choose Response to Outstanding Tax Demand under Pending Actions.
3. Select "Send Response."
4. When you move on to the next step, the options covered above will show up on the screen that is presented below.

Option 1: Accepting the Request

If you agree with the demand, select the Demand is Correct option and read the disclaimer on the Response to Outstanding Amount page. As said here: "You cannot later disagree with Demand once you submit the response as "Demand is accurate."

On the same page, select the Not paid yet option. Then, click Pay Now to be taken to the e-Pay Tax website, where you can make the tax payment. A confirmation message and a Transaction ID appear after a successful payment. For future use, do keep the Transaction ID in mind.

Time Limit for Addressing the Request

The taxpayer has 30 days from the date of service to pay the amount specified in the demand notice, as per the Income Tax Act. But in extraordinary circumstances, the Joint Commissioner of Income Tax (JCIT) may grant prior clearance for the Assessing Officer to shorten this period.

You can submit an application to the Assessing Officer before the 30-day window closes if you require additional time to make the payment or would like to pay the demand in installments. The requests can be evaluated by the Assessing Officer, who will then make a determination based on the merits of each case.

An example of a notice under Section 156

Under Section 156 of the Income Tax Act, a sample notification could contain the following details:

Generally, the notice would include information about the taxpayer, including name, Permanent Account Number (PAN), assessment year, amount owed, amount payable, and directions on how to reply.

Penalties for Delays and Their Consequences

Penalties and other repercussions may result from your failure to pay the amount listed in the income tax demand notice within the allotted period. The following are the main ramifications:

Interest under Section 220(2) is due if the payment is not made within 30 days of receiving the notice. One percent per month, or a portion of it, is the interest rate. Even if the Assessing Officer has permitted payment in installments or extended the payment time, this interest is still due.

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