Income tax demand notice: the 30 days, and day 31
A demand notice is the bill for a decision already made. The clock runs whether you argue with it or not.
30 days from the date the notice was served: pay it, or record a response on the e-filing portal. Separately, 30 days to appeal. Do one of them even if you disagree — silence counts as agreement, and the demand is then set off against any refund you are owed.
If you miss it: You are in default. Interest runs at 1% a month, a penalty up to the whole of the arrears becomes possible, and refunds owed to you for other years are set off against it.
s. 220(1) up to 2025-26 · s. 411(1) from 2026-27 · checked 10 September 2026
Key takeaways
- Thirty days runs from service, not from the date printed on the notice. The Assessing Officer can specify a shorter period, but only with prior Joint Commissioner approval.
- Responding is not the same as paying. On the portal you can agree, agree-and-say-already-paid, or disagree in full or in part — and disagreeing costs nothing and stops the demand being confirmed by default.
- Interest runs at 1% for every month or part of a month. A single day into a new month costs a whole month.
- Filing an appeal does not stop the demand. That needs a separate stay application to the Assessing Officer, who has an express discretion to treat you as not in default while the appeal is pending.
- An unpaid demand can be set off against a refund for any other year — but not silently: written intimation of the proposed set-off has to come first.
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 on 1 April 2026 and renumbered almost everything. It did not renumber your notice. Under the repeal-and-savings provision, an assessment, reassessment, appeal or penalty for a tax year before 1 April 2026 stays under the 1961 Act — even where the notice itself arrives after that date. So the number that governs the letter in your hand is decided by the year the letter is about, not by the date it was posted. Both numbers are given on every page here, with the governing one first.
“The provisions of the repealed Income-tax Act shall continue to apply to any proceeding pending on the date of commencement of this Act and to any proceedings initiated on or after the 1st April, 2026 (including notices, assessment, reassessment, recomputation, rectification, penalty, reference, revision and appeals) in respect of any tax year beginning before the 1st April, 2026.”
- Notice about 2025-26 or earlier
- The Income-tax Act, 1961 numbering is the one that governs it — s. 143(2), s. 156, s. 220, Form 26AS, Form 16. That is most letters arriving in 2026.
- Notice about 2026-27 or later
- The Income-tax Act, 2025 numbering governs — s. 270(8), s. 289, s. 411, Form 168, Form 130. In practice, letters from 2027 onward.
The three responses, and which one is yours
On the portal at Pending Actions → Response to Outstanding Demand, every demand against your PAN is listed with its Demand Reference Number. Each one takes exactly one of these three. Doing nothing is not a fourth option — the department’s own guidance is that an unanswered demand is confirmed and adjusted against your refund.
Demand is correct
- Pick it if
- The number is right and you have not paid it.
- Then
- Pay through the portal, under the head for tax on regular assessment.
- Cost
- The demand, plus any interest already run.
Demand is correct and already paid
- Pick it if
- You paid it and the system has not caught up.
- Then
- Give the challan: type of payment, amount, BSR code, serial number and date, with the challan attached.
- Cost
- Nothing further.
Disagree with the demand, in full or in part
- Pick it if
- Any part of the number is wrong, or the order behind it is being challenged.
- Then
- Select the reason, state the amount not payable under it, and attach the document that proves it. You can disagree with part and pay the rest in the same response.
- Cost
- Nothing. Recording a disagreement is free and is not an appeal.
Options and the disagreement reasons as published by the Income Tax Department on its Respond to Outstanding Demand help pages, checked 10 September 2026. Single attachments are capped at 5 MB.
What a demand notice actually is
A demand notice is not a decision. It is the bill that follows a decision somebody has already made — an assessment order, a penalty order, an appellate order given effect to, or simply the automated processing of your return. The provision that authorises it says only that where a sum is payable in consequence of an order, the officer shall serve a notice of demand specifying the sum. Everything arguable happened in the order behind it.
That matters because it tells you where to aim. Arguing with a demand notice about whether the tax is really due is arguing with the invoice rather than the contract. The demand is attacked either by rectifying the order behind it, or by appealing that order — and the demand itself is dealt with separately, by paying it, by having it stayed, or by letting the interest run.
The commonest surprise on this page: an intimation is a demand notice. Where processing your return produces a sum payable, the provision expressly deems that intimation to be a notice of demand. People who received only an intimation, saw no document headed “notice of demand”, and concluded nothing had started, are the single largest group who arrive here after the 30 days have gone.
Thirty days to pay, running from service. Thirty days to appeal, running from service of the same notice. And, if you want the demand held while you appeal, a stay application which has no statutory period at all but is worthless once recovery has begun. People routinely file the appeal and forget the other two.
Why you received it — where the number came from
A demand is arithmetic, and the arithmetic has a source. Identifying which of these produced yours decides whether the answer is a rectification, an appeal, or a payment.
- Tax credit was not allowed. Someone deducted tax from you and reported it late, against the wrong PAN, or not at all — so the processing allowed less credit than your return claimed, and the difference became a demand. This is the largest single category and it is not your error.
- A challan did not match. The tax was paid, but under the wrong assessment year, the wrong minor head, or with a digit wrong in the PAN, so the system cannot see it against your name.
- An adjustment was made during processing — an arithmetical error, a claim inconsistent with something else in the return, a deduction disallowed because the return was filed late.
- An assessment order added income or disallowed a deduction, and this is the bill for it.
- A penalty order was passed, and the demand is the penalty rather than the tax.
- Interest was charged for late filing, late payment, or shortfall in advance tax — often the whole of a small demand.
- An old demand from an earlier year has surfaced because a refund is now due to you and the system has proposed setting one against the other.
Open the demand on the portal and read the assessment year and the Demand Reference Number, then open your tax credit statement for that same year. In a large share of cases the two together show the whole story — the demand is the exact amount of a credit that has not appeared. If it is, you are not in a dispute about tax; you are waiting on somebody else's filing.
How to respond, step by step
- 1Log in at incometax.gov.in and go to Pending Actions, then Response to Outstanding Demand. Every outstanding demand against your PAN is listed here with its Demand Reference Number, assessment year and amount — including old ones you may have forgotten.
- 2Open the demand and read the assessment year. This decides which Act governs it, and it decides which year's records you need.
- 3Decide which of the three responses is true. Demand is correct; demand is correct and already paid; or disagree with the demand, either in full or in part. You can disagree with part and pay the rest in the same response.
- 4If you agree and have not paid, use Pay Now. Choose the correct head — a payment against an assessment demand is not the same head as advance tax or self-assessment tax, and a payment made under the wrong head produces a fresh mismatch rather than clearing the demand.
- 5If you agree and have already paid, give the challan details: type of payment, amount, BSR code, challan serial number and date of payment, with the challan attached. The single attachment limit is 5 MB.
- 6If you disagree, select the reason. The list includes demand already reduced by rectification or revision; demand already reduced by an appellate order where effect is yet to be given; appeal filed; stay petition filed; stay granted; instalment granted; rectification or revised return filed with CPC; rectification filed with the Assessing Officer; and Others. You may select more than one, and each takes the amount you say is not payable under that head.
- 7Attach the evidence that matches the reason you picked. A reason with no document behind it is the commonest cause of a disagreement that goes nowhere and quietly keeps accruing interest.
- 8Submit and keep the Transaction ID. Then, separately, deal with the order behind the demand — a rectification if the mistake is obvious on the record, an appeal if it is not.
| Your situation | What to select | What to attach |
|---|---|---|
| The demand is right and you have not paid | Demand is correct, then Pay Now | Nothing — pay under the head for tax on regular assessment |
| You already paid but it is still showing | Demand is correct and already paid | Challan: type of payment, amount, BSR code, serial number, date |
| TDS was deducted from you but not credited | Disagree — the reason matching your position, or Others | The TDS certificate and the payment record, and chase the deductor in parallel |
| The order behind it is already under appeal | Disagree — appeal filed | Acknowledgement of the appeal, with the appeal number |
| An appellate order has reduced it but nobody has given effect | Disagree — demand already reduced by appellate order, effect to be given | The appellate order |
| You have applied for a stay, or been granted one | Disagree — stay petition filed, or stay granted | The application or the stay order |
Response options and reasons as published by the Income Tax Department on its Respond to Outstanding Demand help pages, checked on the date shown on this page.
What happens on day 31, and every month after
This is the part every other page leaves out. The consequences are not one event but a sequence, and each has its own provision. None of them requires anybody to decide you have behaved badly — they follow from the period expiring.
- 1You are deemed to be in default. Not a finding, not a judgment — a status that attaches the moment the period lapses without payment or an extension.
- 2Interest starts at 1% for every month or part of a month, running from the day after the period ended until the sum is actually paid. Part of a month counts as a whole one.
- 3A penalty becomes possible. Once you are in default the officer may impose a penalty in addition to the arrears and the interest. It is capped at the amount of the tax in arrears, and it requires a reasonable opportunity of being heard — so it is discretionary, not automatic, but it can double the bill.
- 4Refunds stop reaching you. Any refund for any other year can be set off against the demand. The department's own help pages put it plainly: if you do not respond, the demand is confirmed and adjusted against your refund. The one safeguard is that written intimation of the proposed set-off must be given first.
- 5A recovery certificate can be drawn. The Tax Recovery Officer draws up a signed statement of the arrears, and once drawn you are not entitled to dispute its correctness on any ground before that officer — only clerical and arithmetical errors can be corrected.
- 6Recovery proper begins. Four modes are available: attachment and sale of movable property, attachment and sale of immovable property, arrest and detention in prison, and appointment of a receiver over your property.
Interest is ₹5,000 a month on ₹5,00,000. The last bar adds a penalty at its statutory ceiling — the amount of the tax in arrears, so another ₹5,00,000. That is a ceiling and not an expectation: the penalty is discretionary and requires a hearing. Three years is an ordinary, not a pessimistic, length for a first appeal.
Keeping the money while you argue: stay of demand
Filing an appeal does nothing to the demand. The two run in parallel, and interest accrues throughout. If you want the demand held, you have to ask — and the Act gives the Assessing Officer an express discretion to treat you as not being in default in respect of the disputed amount, even though the time for payment has expired, for as long as the appeal remains undisposed of.
That is a discretion, not a right, and it is exercised against a long-standing administrative benchmark: the officer grants a stay on payment of 20% of the disputed demand. The benchmark comes from a CBDT office memorandum, not from the Act, and it has moved before — it was 15% before it was raised to 20% in 2017. Because it is guidance, an officer can order less, and the Supreme Court has confirmed that a smaller amount can be directed on the facts of a case. Where a deviation is proposed, the officer refers it upward to the Principal Commissioner or Commissioner.
A stay application is worth writing properly rather than as a formality. What moves it is a prima facie case on the merits, genuine hardship in paying, and the balance of convenience — the three things a court would look at. "I have appealed" on its own is a request for a discount, not an argument.
The Budget for 2026 announced a reduction of the standard upfront payment from 20% to 10%, computed only on core tax demand. On the date this page was checked we could not trace a Finance Act provision or a CBDT instruction giving effect to it, and the reduction appears to need an instruction rather than a statutory amendment. So 20% remains the benchmark officers are working to, and 10% is worth asking for and citing. This is a live position and is re-checked when this page is reviewed.
Two levers most people never use
Neither of these is an appeal, and both are available while an appeal is pending.
- Time to pay, or instalments. The Act lets the Assessing Officer extend the time for payment or allow payment by instalments — but the application has to be made before the period expires. Made in time, it prevents default rather than excusing it, which is a materially better position than asking for forgiveness afterwards.
- Waiver of the interest. The Principal Chief Commissioner, Chief Commissioner or Commissioner may reduce or waive interest where paying it would cause genuine hardship, the default was due to circumstances beyond your control, and you have co-operated in the inquiry and in recovery. All three conditions have to be met, and the application is made to that officer rather than to the assessing officer.
Apply for instalments or extra time before day 30. Respond on the portal before day 30. File the appeal before day 30. Then apply for the stay. Doing them in that order costs nothing extra and leaves every option open; doing the appeal first and the rest later is how a demand becomes a recovery certificate while the appeal is still listed.
Getting the demand removed rather than delayed
A stay buys time. What actually removes a demand is fixing the order behind it, and there are three routes with very different costs.
| Route | When it fits | Cost | Realistic time |
|---|---|---|---|
| Rectification of a mistake apparent on the record | Credit not allowed, challan not matched, arithmetic wrong — anything obvious from the record without argument | Free | Weeks to months |
| Appeal to the Commissioner (Appeals) | The order is wrong on the facts or the law and explaining why takes more than a sentence | ₹250 to ₹1,000, plus representation | Commonly one to three years |
| Appeal effect after you have already won | An appellate order has reduced the demand but nobody has updated the system | Free — it is an administrative step | Weeks, once chased |
The third row is more common than it should be, and is why the portal carries "demand already reduced by appellate order but appeal effect to be given" as a standing reason for disagreeing.
The 30 days for the appeal keep running while a rectification sits in a queue for months. People file the rectification, wait, are refused, and find the appeal window has closed. Where the point could go either way, file the appeal first — it can be withdrawn if the rectification succeeds — and remember that delay can be condoned for sufficient cause, but "I was waiting" is a poor reason to have to argue.
Worked examples
Example 1: A demand that was entirely somebody else's late filing
- Assessment year
- 2025-26
- Demand
- ₹42,000
- Notice served
- 6 July 2026
- TDS certificate shows deducted
- ₹1,90,000
- Credit statement shows
- ₹1,48,000
- 1.₹1,90,000 less ₹1,48,000 is ₹42,000 — exactly the demand. So this is not a dispute about tax at all; a deductor filed one quarter's statement late or against a wrong PAN.
- 2.Deadline: 30 days from 6 July, so 5 August 2026. The same date is the last day to appeal.
- 3.On the portal, respond as disagree, choosing the reason that matches, attaching the TDS certificate and stating ₹42,000 as not payable. This stops the demand being confirmed by default and stops it being set off against any refund.
- 4.In parallel, write to the deductor asking them to file a correction statement. Only they can. Once filed, the credit typically appears within a week or two.
- 5.Once the credit appears, file a rectification of the processing order so the credit is allowed and the demand is cancelled.
Demand cancelled, nothing paid, no appeal, no fee. Doing nothing instead would have cost ₹420 a month in interest and would have taken any refund for another year — and the person who could fix it would never have been told there was a problem.
Example 2: A ₹6,00,000 demand from an assessment order, appealed
- Assessment year
- 2023-24
- Addition made
- ₹18,00,000, treated as unexplained
- Demand raised
- ₹6,00,000 including interest
- Notice served
- 12 August 2026
- Position
- The addition is genuinely arguable
- 1.This is a 2023-24 year, so it stays under the 1961 Act throughout — s. 156 demand, s. 220 recovery, s. 246A appeal. The 2025 Act numbering is irrelevant to it.
- 2.Deadline: 11 September 2026 for everything. Appeal to the Commissioner (Appeals), fee ₹1,000 because assessed income exceeds ₹2 lakh.
- 3.Before the appeal is admitted, the tax on the returned income must have been paid. That is the income the taxpayer themselves declared, not the ₹18,00,000 addition — a distinction competitor pages routinely blur, and it is the difference between a few thousand rupees and ₹1,20,000.
- 4.On the portal, respond as disagree, reason: appeal filed, attaching the acknowledgement.
- 5.Then apply to the Assessing Officer for a stay. Against the 20% benchmark that is ₹1,20,000. The application argues the prima facie case, hardship and balance of convenience, and asks for less than 20% on those grounds.
- 6.If a stay is granted on payment of ₹1,20,000, interest still runs on the unpaid ₹4,80,000 — a stay suspends recovery, not the interest clock.
₹1,20,000 out, ₹4,80,000 held, and roughly ₹4,800 a month accruing on the balance while the appeal is pending. Over a two-year appeal that is about ₹1,15,000 of interest — which is the real reason to argue for a smaller deposit and a faster listing, and the reason a genuinely weak case is better paid than fought.
Example 3: The demand nobody remembered, found by a refund
- Refund due for
- AY 2026-27, ₹31,000
- Intimation received
- Refund proposed to be adjusted
- Old demand
- AY 2019-20, ₹27,400
- Period given to respond
- 21 days
- 1.The old demand exists because an intimation years earlier showed a sum payable and was never answered. An unanswered demand is confirmed, and it sits against the PAN indefinitely.
- 2.The set-off is lawful, but only after written intimation of the proposed action — which is what has now arrived. This intimation is the opportunity, and it is the last one.
- 3.Check the 2019-20 records before responding. If the old demand was itself a credit mismatch, it may still be capable of rectification even now, because the time limit for rectification runs from the order rather than from the demand.
- 4.Respond within the period given, disagreeing and stating why, rather than letting it lapse a second time.
The general lesson matters more than this case: an unanswered demand does not expire quietly. It waits until you are owed money, and then it takes it. Clearing an old demand while nothing is at stake is far easier than arguing about it in a 21-day window years later.
More questions about this page
How long do I have to respond to an income tax demand notice?▼
What happens if I do not pay an income tax demand within 30 days?▼
Does filing an appeal stop an income tax demand?▼
Can I disagree with a demand without paying anything?▼
How is interest on an income tax demand calculated?▼
Can the department adjust my refund against an old demand?▼
Is an intimation the same as a demand notice?▼
Can I pay an income tax demand in instalments?▼
Which section governs a demand notice — 156 or 289?▼
Can I get the interest on a demand waived?▼
Official sources checked
The statutes, rules and regulator pages the statements on this page were checked against.
- Income-tax Act, 2025 — s. 289 (notice of demand), s. 411 (payment, default, interest, instalments, waiver, stay), s. 412 (penalty in default), s. 413 (recovery certificate), s. 438 (set-off of refunds), s. 536 (repeal and savings)Read section by section against the enacted text. The department's statutory site refuses automated requests, so a section-by-section reproduction was used and cross-checked; recorded in research/income-tax-gap.md §0.
- Portal path, the three response options, the disagreement reasons and the 5 MB attachment limit. Also the department's own statement that an unanswered demand is confirmed and adjusted against a refund.
- The 20% benchmark, raised from the earlier 15%. Administrative guidance, not statute; a lesser amount can be directed, and a proposed deviation is referred to the Principal Commissioner or Commissioner.
- Budget 2026 — announced reduction of the standard upfront payment from 20% to 10% on core tax demandAnnounced. On the date checked, no Finance Act provision or CBDT instruction giving effect to it could be traced, and commentary suggests it requires an instruction rather than a statutory amendment. Treated on this page as not yet operative and flagged for re-check.
What day 31 does, and every month after it
Everybody tells you the deadline is thirty days. Almost nobody tells you what happens when it passes, which is the thing you actually want to know. None of this requires anyone to decide you have behaved badly — it follows from the period expiring.
- Day 31
You are deemed to be in default
Not a finding and not a judgment about you — a status that attaches the moment the period lapses without payment, without an extension having been applied for, and without the demand having been stayed.
s. 220(1) up to 2025-26 · s. 411(1) from 2026-27
- From day 31, every month
Interest at 1% a month, or part of a month
Simple interest on the unpaid amount, from the day after the period ended until it is actually paid. “Part of a month” is the expensive phrase: one day into a new month costs a whole month.
s. 220(2) up to 2025-26 · s. 411(3) from 2026-27
- Once in default
A penalty becomes possible, up to the whole of the arrears
The officer may impose a penalty in addition to the arrears and the interest, capped at the amount of the tax in arrears. It is discretionary and needs a reasonable opportunity of being heard — but at its ceiling it doubles the bill.
s. 221 up to 2025-26 · s. 412 from 2026-27
- Whenever a refund next arises
Refunds for other years are set off against it
Any refund owed to you for any year can be adjusted against the demand. The one safeguard is real and worth using: written intimation of the proposed set-off must be given before it happens.
s. 245 up to 2025-26 · s. 438 from 2026-27
- When recovery is initiated
A recovery certificate is drawn
The Tax Recovery Officer draws a signed statement of the arrears. Once drawn, you are not entitled to dispute its correctness on any ground before that officer — only clerical and arithmetical errors can be corrected.
s. 222 up to 2025-26 · s. 413 from 2026-27
- After the certificate
Attachment, sale, a receiver, or arrest
Four modes are available: attachment and sale of movable property; attachment and sale of immovable property; appointment of a receiver over your property; and arrest and detention in prison.
Second Schedule up to 2025-26 · s. 413 and the rules under it from 2026-27
Each consequence is taken from the provision named beside it, checked 10 September 2026. The sequence is not automatic in the sense of being instantaneous — the penalty is discretionary and requires a hearing, and recovery takes time — but every step is available to the department once the period has lapsed.
You are here
Holding a demand notice and working out what to do before the 30 days run out
What to do next
- 1
If the demand is the exact amount of a missing TDS credit
Then this is not a tax dispute at all — it is somebody else's filing, and only they can correct it.
Form 26AS mismatch → - 2
If the demand came from an intimation rather than an assessment
An intimation showing a sum payable is deemed to be a demand notice — and the fork between rectification and appeal is decided there.
Intimation under section 143(1) → - 3
If the demand is a penalty rather than tax
A penalty is separately appealable, and it is not automatic — something has to happen before it can be imposed at all.
Income tax penalties → - 4
If you are not sure this is a demand notice
Eight notice types, matched by what the letter says rather than by the section number on it.
Which income tax notice is this? → - 5
If the trail leads back to the PAN rather than the tax
A PAN that has stopped working, or credit landing against a different number, is a different problem with a different fix.
Reading your own PAN →
This page is general information about procedure and deadlines, checked against the provisions in force on the date shown. It is not advice on your own assessment, and a notice that looks routine can turn on facts a page cannot see. Where money or a limitation period is at stake, put the notice in front of a practising Chartered Accountant.