Income tax demand notice: how to respond in 30 days

Which notice is it

Before anything else, check what your notice actually asks for, because two very different things travel under the name “income tax notice”.

A demand notice asks for money. It quotes section 156, or arrives as the tax-payable outcome of a 143(1) intimation, states a rupee amount, and gives you 30 days. This article is the playbook for that notice.

A verification or scrutiny notice asks for documents. It quotes section 142(1) or 143(2), or is a summons under section 131(1A), and asks you to produce evidence: income proofs, bank statements, foreign tax returns, the Form 67 foreign tax credit working behind a DTAA claim, sometimes for years well in the past. Foreign income and assets have no reassessment time limit under the Black Money Act, so these notices can reach back a long way. If that is what landed in your inbox, the response is documents rather than payment, and the right reading is our guides on why NRIs are getting notices in 2026 and scrutiny in FY 2026-27.

A reassessment show-cause notice under section 148A(1) sits between the two. It says the department has information suggesting income has escaped assessment, lists the items it could not verify, most often the deductions on an old return, and asks you to show cause why a reassessment notice under section 148 should not be issued. Expect it to name each claim with the evidence wanted: rent agreement, rent receipts and bank statements proving transfers for HRA; premium receipts for section 80D; LIC, housing loan or school fee proofs for section 80C. This is the one notice where the reply itself can close the matter. Satisfy the Assessing Officer with documents at this stage and no reassessment follows. Stay silent, or claim things you cannot support, and the section 148 notice issues, the year is reopened, and the reassessment order usually arrives with exactly the section 156 demand this article covers. So respond by the date printed on the notice with every proof you still hold, and say plainly which claims you can no longer evidence; an honest partial response is far better than none. How far back these notices can reach is covered in our guide to retention periods: about five years for most returns now, longer for returns filed before September 2024, and no time limit at all where foreign income or assets are involved.

Confirmed it is a demand? Then the next 30 days look like this.

The 30-day clock

Section 156 gives you 30 days from service of the notice to pay. Miss it and three things happen more or less automatically:

• Interest under section 220(2) starts at 1% per month, or any part of a month, on the unpaid amount.
• Refund adjustment under section 245: your pending refunds from other years can be set off against the demand.
• Assessee in default: penalty under section 221 becomes possible, and in stubborn cases recovery proceedings can attach bank accounts or salary.

The single most expensive mistake is doing nothing while you make up your mind. Responding on the portal, even to disagree, costs nothing and preserves every option. Silence costs 1% a month.

Days 1 to 3: verify

First, make sure the demand is real and understand it line by line.

1. Check the DIN. Every genuine notice carries a Document Identification Number. Verify it on the portal under e-File → Verify Notice/Order. A demand that is not also visible under Pending Actions → Response to Outstanding Demand is suspect.
2. Open the PDF. The password is your PAN in lowercase followed by your date of birth as DDMMYYYY.
3. Note two dates. The date of service, which starts your 30 days, and the assessment year the demand belongs to. Both matter for everything that follows.

Days 3 to 7: diagnose

A demand is always the result of a mismatch. Your job this week is to find the specific line that produced it. Download Form 26AS and the AIS for the relevant year, put them next to your filed ITR, and compare. The usual suspects: a TDS credit the deductor reported against the wrong PAN or quarter, a challan paid under the wrong assessment year, a deduction CPC capped or denied, interest income the AIS knows about that the return missed, or plain interest under sections 234A/B/C for late payment.

If the demand came from a 143(1) intimation, run it through our free 143(1) Intimation Decoder: it identifies the exact adjustment CPC made and the documents that answer it. For the fuller background on demand types and reasons, the reference guide is Income Tax Demand Notice: what it means and how to respond.

Days 7 to 15: decide

By now you know whether CPC is right. That gives you exactly three paths.

Three timing rules that trip people up:

• Rectification does not pause the clock. Interest under 220(2) keeps running while your 154 application sits in queue. If part of the demand is undisputed, pay that part now and contest the rest.
• The appeal deadline runs from the demand notice, not from the rectification outcome. For a large demand, that can mean filing a protective appeal within the same 30 days even while rectification is pending.
• You can buy time officially. Section 220(3) lets you ask the Assessing Officer for an extension or instalments before the 30 days expire. And once an appeal is filed, a stay of demand is typically granted on payment of 20% of the disputed amount.

Days 15 to 30: respond

Whatever path you chose, record it on the portal before the window closes: Pending Actions → Response to Outstanding Demand, then agree, partially agree, or disagree with reasons and attachments. This response is what stops the department's recovery machinery from treating you as unresponsive, and it is timestamped evidence that you acted within the period.

Attach the documents that prove your position: the TDS certificate, the challan receipt, the investment proof, the corrected 26AS. A disagreement without evidence is just a delayed agreement.

After the response

Save everything from this episode as one bundle for the assessment year: the notice PDF, your portal response acknowledgement, the challan if you paid, the rectification acknowledgement, and every proof you attached. Demands have a way of resurfacing, most often as a section 245 refund adjustment years later that quotes a demand you thought was closed. On that day, this bundle is the two-minute answer.

Keep the bundle at least six years. Anything touching foreign income or foreign assets, keep permanently: the Black Money Act sets no time limit on reassessment.

Disclaimer. This article is general information on responding to income tax demand notices in India, current at publication. It is not legal or tax advice. Deadlines, interest rates and stay-of-demand practice can change and can differ on facts. Consult a qualified chartered accountant for your specific situation.