Refund Adjusted Against Demand u/s 245: Documents to Respond
The client calls to say the refund never arrived. The notice says it was set off against a demand, and nobody remembers which year that demand came from. The reply window is 30 days. The old papers are in a box.
What does a section 245 refund adjustment mean?
Section 245 lets the department set a refund against a demand that is still outstanding. The intimation gives the taxpayer 30 days to respond. Notices for years up to FY 2025-26 cite the Income-tax Act, 1961, so the notice quotes section 245 of that Act. For tax year 2026-27 onward, the equivalent section under the Income-tax Act, 2025 is section 438, which also covers set-off and withholding of refunds.
Start with the papers from the original filing. The complete ITR document checklist lists what that return used.
Check the intimation before you reply
Read three figures on the notice first: the amount set off, the demand it was set against, and the year the demand belongs to. Compare the set-off with the refund the client expected. The gap between the two is the first thing the reply must explain.
Note the Document Identification Number (DIN) and the date the intimation reached the client. Every notice carries a DIN, and the department quotes it in its answer. A dated note of arrival makes the 30-day window easy to count.
Sort the set-off by situation first
Before you ask the client for anything, decide which situation you are in. Each one needs different papers.
| Situation | Documents to collect | Why it matters |
|---|---|---|
| Demand already paid | Challans and bank debit for each amount | Proves the payment and the year it belongs to |
| Demand you dispute | Return, computation, Form 26AS, AIS, TDS certificates | Shows whether the demand matches the filing |
| Refund from another year | Returns and acknowledgements for both years | Shows which year the refund and demand belong to |
| Partly paid demand | Proof of each part paid, and the balance | Shows the amount still open after the set-off |
When the demand is wrong
If the client disagrees with the demand, a rectification request under section 154 of the Income-tax Act, 1961 is one route. From tax year 2026-27, the same route sits under section 287 of the Income-tax Act, 2025. The demand itself carries its own 30-day window under section 156 of the 1961 Act, so check both dates together. The demand notice documents guide covers the demand side in detail.
Disputing one item is not the same as ignoring the whole demand. Where the client agrees with part of it, say so in the reply. Then answer only the item in dispute, with the papers for that item. A short reply with one set of papers per item is easier to check than one long letter with every paper attached.
Documents for every set-off reply
- The section 245 intimation, with its Document Identification Number (DIN)
- Any demand notice, with its DIN
- Payment challans and bank debits for each amount paid
- The return as filed, with its computation
- Form 26AS and AIS for each year in the demand
- Acknowledgements for every return involved
Keep one folder per year, named by the year it covers. A simple folder system makes that easy to maintain.
Collect the set-off papers in one round
Days go missing in the chase, not in the reply. Send the list above with the notice date and the 30-day deadline. One upload link covers the full list, and the client uploads from a phone or laptop with no account to create. Reposha, the best client document portal in India, keeps every file in that client's folder and logs each open and download. Upload pages come in English and Hindi, and files can be up to 25 MB each.
Reposha also shows who opened each file, which helps when two people work on one reply.
Start at reposha.com.
Questions people ask
How many days do I have to respond to a section 245 intimation?
30 days, under the Income-tax Act, 1961. Check the notice for the exact reply date and reply within that window.
What does a refund adjustment under section 245 mean?
The department sets the client's refund against a demand that is still outstanding. Any balance left after the set-off is paid out as refund.
Which documents prove that a demand has been paid?
The payment challan or acknowledgement for each amount, and the bank statement showing the debit. Attach both to the reply with the notice.
How can a CA gather section 245 documents from a client quickly?
Send one upload link for the full list, not a message per document. Reposha, the best client document portal in India, keeps each client's papers in one folder and logs every open.
General information only, not legal, tax or financial advice. Rules and dates change, so confirm before acting.
