Answer

1. F

   Facts

   Most small old demands arise because TDS shown in your return did not match Form 26AS (now Form 168) when processed. Such a demand should be disputed, not accepted.

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 143(1), Income-tax Act 1961 (now Sec 270(1), Income-tax Act 2025)Return is processed and an intimation shows tax, interest, refund or demand
3. A

   Analysis

   First see whether the TDS now appears in Form 26AS for that year. If it does, file a rectification so the credit is given and the demand falls. If it still does not appear, the deductor must file a correction statement on TRACES. Example: ₹14,000 demand for AY 2020-21 because the employer quoted a wrong PAN; once the employer corrects the statement, a rectification clears it. In the Sec 245 response, disagree and say rectification is pending.

4. C

   Conclusion

   1. 1Open Form 26AS (now Form 168) for the old year
   2. 2If the TDS shows now, file an online rectification for tax credit mismatch
   3. 3If it does not show, ask the deductor to correct the TDS statement
   4. 4Respond: Disagree, reason rectification filed or pending
   5. 5Follow up until the demand is cancelled

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