ITR
Can my income tax refund be adjusted against GST dues
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
Sec 245 (now Sec 438) lets the income tax department set off refunds against sums payable under the income tax law. GST dues are recovered under the GST law, not through this intimation.
Provisions and law
- Sec 245, Income-tax Act 1961 (now Sec 438, Income-tax Act 2025)Refund can be set off against an earlier demand only after a written intimation to the taxpayer
Analysis
If a Sec 245 intimation names a demand, it will be an income tax demand with an assessment year and section. Example: a proprietor has a ₹50,000 GST liability and a ₹20,000 income tax refund; the refund is not adjusted to GST through this route. GST recovery uses separate GST powers. Check each item in the outstanding demand list to be sure it is an income tax demand.
Conclusion
- Check the outstanding demand list for the act and section
- Respond to any income tax demand on merits
- Deal with GST dues separately on the GST portal
- Ask a CA if a recovery notice mentions both
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Refund set-off, Sec 245 (now 438)
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