ITR
Paying a penalty demand or getting a stay
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
A penalty order comes with a notice of demand, normally payable within 30 days. If you appeal, you can ask the officer to stay recovery; departmental guidelines usually expect a part payment of the disputed demand for a stay.
Provisions and law
- Sec 156 (now Sec 289)Notice of demand
- Sec 220, Income-tax Act 1961Interest and recovery for demand not paid
- Sec 246A (now Sec 357)Appeal to the Commissioner (Appeals)
Analysis
File the appeal first and then apply for stay with the appeal acknowledgement. Departmental guidelines have generally asked for 20% of the disputed demand; Budget 2026 proposed a lower pre-payment for core tax, so check the latest instruction. If the penalty is ₹2,00,000, a 20% payment would be ₹40,000. Record disagreement on the portal so recovery is less likely while stay is decided.
Conclusion
- File the appeal and keep the acknowledgement
- Apply to the AO for stay of demand
- Pay the part amount if required by current guidelines
- Mark the demand as disputed on the portal
Check the latest CBDT instruction on the stay payment percentage before paying.
A Savvy can do this for you
Penalty notice, Sec 270A / 274 (now 439 / 471)
₹4,999
Get this doneAsk a Savvy on WhatsAppGeneral guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.