Outstanding Demand in Income Tax: How To Respond?

Check the demand under Pending Actions > Response to Outstanding Demand. If valid, pay via Pay Now; if already paid, enter the Challan details (BSR Code, Serial Number, Date, Amount); if incorrect, select Disagree with Demand, attach supporting proofs, and file a Section 154 Rectification request if applicable.

Outstanding demands under Section 143(1) in AY 2026-27 usually come from TDS mismatch between Form 26AS and the ITR, deduction disallowances, or old unresponded demands.

Steps to respond:

1. CHECK THE NOTICE: Log in to incometax.gov.in, go to e-File > Respond to Outstanding Demand. The portal shows the exact computation behind the demand.

2. IDENTIFY THE CAUSE: Match the demand against your ITR computation. Section 143(1) intimations are factual. Section 143(3) scrutiny demands need professional handling.

3. RESPOND ON PORTAL:
   - Demand is correct: Pay the challan linked in the notice.
   - Already paid: Enter BSR code, serial number, and payment date from your challan.
   - Partially agree: Split response on portal and file Section 154 rectification for the incorrect portion.
   - Fully disagree: Section 154 (factual error) or CIT-A appeal (legal question).

Key timing: For Section 245 notices (refund adjustment), respond within 30 days. A non-response allows automatic refund set-off.

For factual errors (wrong TDS credit, wrong assessment year), Section 154 rectification is faster than an appeal and can be filed on the portal directly. This [guide on common ITR filing mistakes and demand notices](https://taxgarden.in/blog/common-itr-filing-mistakes-refund-delay-notices-ay-2026-27) covers the exact portal steps for the most common demand scenarios.