Answer

1. F

   Facts

   If you do not pay or respond within the time, you are treated as an assessee in default. Interest runs at 1% a month, a penalty can be levied, and the officer can start recovery, including from your bank account.

2. P

   Provisions and law

   • Sec 220, Income-tax Act 1961A demand is payable within 30 days of service of the notice of demand; simple interest of 1% a month runs after that; the officer may allow more time or instalments, and may treat you as not in default while an appeal is pending (2025 Act number to be confirmed).
   • Sec 221, Income-tax Act 1961Penalty can be levied on an assessee in default, up to the tax in arrears, after a hearing (2025 Act number to be confirmed).
   • Sec 245, Income-tax Act 1961 (now Sec 438)A refund can be set off against an outstanding demand after intimation to you.
3. A

   Analysis

   Ignoring the demand also means it is confirmed and set off against any refund for later years. Recovery steps can include a notice to your bank to pay from your account. Even if you think the demand is wrong, respond on the portal and start the right remedy. A simple response often stops automatic adjustments.

4. C

   Conclusion

   1. 1Do not ignore the notice.
   2. 2Check whether the demand is correct.
   3. 3Pay, or respond with reasons and start rectification or appeal.
   4. 4Apply for stay or instalments if needed.
   5. 5Keep all acknowledgements.

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