Traces- TDS Demand Outstanding
This query is : Resolved
25 June 2025
Dear Members,
There was a demand for interest for F.Y. 2023-24, we made the payment on 31/03/2025 so the challan was reflected on traces site on 01/04/2025 therefore we could not file correction return before 31st March 2025 (last time limit for filing TDS correction return of 6 years lapsed). Now still the demand is shown as outstanding and we have done the payment but how do we close the demand?
Do we need to wait for Manual Demand to be raised? What is the time limit?
There was a demand for interest for F.Y. 2023-24, we made the payment on 31/03/2025 so the challan was reflected on traces site on 01/04/2025 therefore we could not file correction return before 31st March 2025 (last time limit for filing TDS correction return of 6 years lapsed). Now still the demand is shown as outstanding and we have done the payment but how do we close the demand?
Do we need to wait for Manual Demand to be raised? What is the time limit?
12 August 2025
Situation Recap:
Demand for interest for FY 2023-24 raised.
Payment made on 31/03/2025 but challan reflected on TRACES on 01/04/2025 (after due date).
Could not file TDS correction return before 31 March 2025 (6-year limit expired).
Despite payment, demand still shows as outstanding on TRACES.
How to close the demand?
Check Payment Status:
Since payment was made, verify that the challan details are correct (TAN, assessment year, etc.).
Sometimes the portal takes a few days to update the status and reflect payment against demand.
Demand not auto-closed on TRACES:
The system does not automatically close demands if the payment date is beyond due date or if correction return was not filed.
The demand remains until manually adjusted.
Manual Demand Adjustment:
The Income Tax Department issues a Manual Demand Notice/Adjustment based on your payment details.
You may need to raise a Rectification Request or Grievance on the TRACES portal or CPC website explaining the situation with proof of payment.
Time limit for Manual Demand:
Normally, the department can raise or adjust demands within the statutory time limit of 6 years from the end of the relevant financial year.
Since you paid after due date, manual adjustment may take some time (usually 30-60 days).
Next Steps:
Monitor your TRACES and CPC account for updates.
If demand continues to show, raise a grievance or contact the assessing officer (AO) with payment evidence.
Keep all challan and bank payment proofs handy.
Demand for interest for FY 2023-24 raised.
Payment made on 31/03/2025 but challan reflected on TRACES on 01/04/2025 (after due date).
Could not file TDS correction return before 31 March 2025 (6-year limit expired).
Despite payment, demand still shows as outstanding on TRACES.
How to close the demand?
Check Payment Status:
Since payment was made, verify that the challan details are correct (TAN, assessment year, etc.).
Sometimes the portal takes a few days to update the status and reflect payment against demand.
Demand not auto-closed on TRACES:
The system does not automatically close demands if the payment date is beyond due date or if correction return was not filed.
The demand remains until manually adjusted.
Manual Demand Adjustment:
The Income Tax Department issues a Manual Demand Notice/Adjustment based on your payment details.
You may need to raise a Rectification Request or Grievance on the TRACES portal or CPC website explaining the situation with proof of payment.
Time limit for Manual Demand:
Normally, the department can raise or adjust demands within the statutory time limit of 6 years from the end of the relevant financial year.
Since you paid after due date, manual adjustment may take some time (usually 30-60 days).
Next Steps:
Monitor your TRACES and CPC account for updates.
If demand continues to show, raise a grievance or contact the assessing officer (AO) with payment evidence.
Keep all challan and bank payment proofs handy.
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