Find
The whole ₹5,000 refund will be adjusted, and ₹45,000 will remain payable. Interest on the unpaid demand continues under Sec 220(2) at 1% a month.
ITR
Refund smaller than the old demand
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Provisions
Sec 245, Income-tax Act 1961 (now Sec 438, Income-tax Act 2025); Sec 220(2), Income-tax Act 1961; Sec 156, Income-tax Act 1961 (now Sec 289, Income-tax Act 2025)
Analysis
If you accept the demand, pay the balance soon to stop interest. If you dispute it, file rectification or appeal and ask for a stay. Example: ₹45,000 left unpaid for 6 months adds about ₹2,700 in interest. A senior citizen or salaried person with a genuine but large old demand can ask the officer about paying in instalments, which the officer can allow with reasons.
Close
- Decide whether the demand is correct
- If correct, agree and pay the balance via e-Pay Tax
- If wrong, dispute it and file rectification or appeal
- If payment is hard, ask the officer for instalments
- Keep the payment challan and update the response
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