A demand notice means the Income Tax Department has worked out that you owe more tax than you paid. It usually arrives by email and SMS after your return is processed. Many demands are correct, but a large share come from a TDS credit that did not match, a deduction that was not allowed, or a challan that was not linked to your return. Read it carefully before you pay or reply.
Which section is my notice under?
For returns up to FY 2025-26 (AY 2026-27), notices still cite the Income-tax Act, 1961. The processing intimation is issued under section 143(1), and a demand is raised under section 156. From tax year 2026-27, the Income-tax Act, 2025 applies, and the same steps carry new numbers: the intimation is under section 270(1) and the notice of demand under section 289. The process is the same under both.
How to open the demand notice PDF
The PDF is password protected. The password is your PAN in lowercase followed by your date of birth in DDMMYYYY format, with no spaces. For a PAN ABCDE1234F and a date of birth of 15 August 1985, the password is abcde1234f15081985. For a company, firm or trust, use the date of incorporation or formation instead.
Check that the notice is genuine
- Log in to the income tax e-filing portal and look under Pending Actions. A real demand appears there under Response to Outstanding Demand.
- Notices from an assessing officer carry a Document Identification Number (DIN). Use Authenticate notice/order issued by ITD on the portal's home page to check it.
- Never pay through a link in an email or SMS. Pay only through e-Pay Tax on the portal or your bank's net banking.
Why demands are raised
- TDS claimed in the return does not match Form 26AS, often because the deductor filed a wrong PAN or a late TDS return
- A deduction or exemption was not allowed during processing
- Income shown in your Annual Information Statement (AIS), such as interest or dividends, was missing from the return
- Advance tax or self-assessment tax was paid under the wrong year or wrong minor head, so the credit was not given
- Interest for late filing or short payment of advance tax was added
- A different tax regime or a calculation difference was applied
Check the demand before you respond
The intimation shows two columns: the figures from your return and the figures as computed by the department. Compare them line by line. The difference tells you exactly where the demand comes from. Then check Form 26AS, AIS and your challans for that year.
How to respond on the portal
- Log in and go to Pending Actions, then Response to Outstanding Demand.
- Select the demand and choose a response: the demand is correct, partly correct, or you disagree with it.
- If you disagree, choose the reason, enter the amount you dispute and upload supporting documents, such as a TDS certificate or challan.
- Submit and keep the acknowledgement.
Be careful with the "demand is correct" option. Once you accept a demand, you cannot dispute it later through this facility.
Paying the demand
If the demand is right, pay it through e-Pay Tax on the portal, choosing the correct assessment year and minor head 400 (tax on regular assessment). A demand is generally payable within 30 days of the notice. After that, interest runs at 1% per month or part of a month on the unpaid amount, and the department can adjust it against refunds due to you for other years.
If the demand is wrong
- Mistake apparent from the record, such as TDS or a challan not counted: file an online rectification request (section 154 of the 1961 Act, section 287 of the 2025 Act).
- Disagreement on how the law was applied: rectification may not be enough, and an appeal may be needed within the time allowed.
- Refund adjustment: if the department proposes to set the demand off against a refund, it gives you a chance to respond. Reply within the time stated, or the adjustment goes ahead.
Do not ignore it
An unpaid and unanswered demand keeps adding interest, blocks future refunds and can lead to recovery action. Even a demand you think is wrong needs a response on the portal.
Quick answers
What is the password for an income tax demand notice?
Your PAN in lowercase followed by your date of birth in DDMMYYYY format, with no spaces. For example, abcde1234f15081985.
How many days do I have to pay an income tax demand?
Generally 30 days from the date the notice is served. After that, interest of 1% per month or part of a month applies to the unpaid amount.
Can I disagree with an income tax demand?
Yes. On the e-filing portal, go to Pending Actions, then Response to Outstanding Demand, choose that you disagree, give the reason and upload supporting documents.
How we can help
Our team of chartered accountants reads the notice, checks it against your records and replies on the portal for you. See our Income tax notices service, or message us on WhatsApp with a copy of the notice.
This article is general information, not advice for your situation. Tax rules change, so speak to us before acting on it.