Answer

1. F

   Facts

   A paid demand can still show as outstanding if the challan was not matched to the right year or the payment was made under the wrong head. The fix is to tell CPC the demand is already paid and give the challan details.

2. P

   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
   • Sec 154, Income-tax Act 1961 (now Sec 287, Income-tax Act 2025)A mistake apparent from the record can be rectified, on request or by the officer
   • Sec 156, Income-tax Act 1961 (now Sec 289, Income-tax Act 2025)A notice of demand states the tax, interest or penalty payable
3. A

   Analysis

   In the response, choose Disagree and the reason that the demand has been paid, then enter the BSR code, challan date, serial number and amount. Example: you paid ₹12,400 in 2022 as self-assessment tax for AY 2021-22, but the demand stayed open because the challan was tagged to AY 2022-23. The response goes to the jurisdictional officer for confirmation, who can correct the credit. If the challan was under the wrong year, a challan correction or rectification may also be needed.

4. C

   Conclusion

   1. 1Find the challan in Form 26AS (now Form 168) or your bank statement
   2. 2Check the assessment year and minor head on the challan
   3. 3Respond: Disagree, reason demand already paid, with challan details
   4. 4If the year or head is wrong, ask the officer to correct it
   5. 5Follow up until the demand shows as nil

Keep the challan counterfoil; the BSR code and serial number are what the department matches.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.