9 Steps to take after receiving income tax demand notice

If you have received any income tax demand notice, then you need to take below steps to resolve this demand notice. Taking action on the income tax demand notice is quite essential to avoid any issues in future.

What should you do after you receive income tax demand notice?

You should take below steps after you receive income tax demand notice.

Review the demand: 

Carefully examine the details mentioned in the demand notice. Understand the reason for the demand, the period it covers, and the amount requested.

Verify the demand: 

Cross-check the demand with your tax records and calculations to ensure its accuracy. Look for any discrepancies or errors that may have resulted in an incorrect demand.

Pay if income tax demand notice is correct: 

If the demand is valid and you owe the amount stated, it is advisable to pay it promptly. Delaying or ignoring the demand can lead to additional penalties and interest charges. You can follow this link to know how to respond to an outstanding demand.

Respond within the deadline: 

If you disagree with the demand or believe it to be incorrect, you usually have a specific timeframe within which you need to respond. Failing to respond within the given timeframe may lead to penalties or further complications. Make sure to adhere to the deadline.

File an appeal: 

If you firmly believe that the demand is unjustified, you can file an appeal with the appropriate tax authority. The appeal process typically involves providing supporting documentation and presenting your case for reconsideration.

File for Stay from recovery: 

As per Indian Income Tax Act, 1961, you can file for stay from recovery of income tax demand by filing an application for stay before the tax authorities. If you feel that your case is fit for filing the appeal, you should also file the application for stay from recovery.

Provide the necessary documentation: 

Gather all relevant documents, such as tax returns, financial statements, and other supporting evidence, to substantiate your position. These documents will strengthen your case during the appeal process.

Maintain communication: 

Keep in touch with the tax authorities throughout the process. Respond to any further queries or requests for information promptly and cooperatively.

Seek professional advice: 

If you are unsure about how to proceed, it is advisable to consult a tax professional or a chartered accountant. They can guide you through the process and help you understand your options.


Remember, each country may have its specific procedures and regulations regarding income tax demands. It is crucial to familiarize yourself with the tax laws of your jurisdiction and consult with professionals who are well-versed in tax matters to ensure the best course of action for your situation.

Also Read: 

Rates of Income Tax for AY 2024-25


What are the options to file an appeal against the income tax demand notice?

Appeal against income tax demand notice can be filed with Commissioner of Income Tax in form 35. If your demand is also confirmed by Commission of Income Tax Appeals then you need to file an appeal before Income Tax Appeallate Tribunal (ITAT).

What is the timeline to file an appeal against income tax demand notice?

Appeal before Commission of Income Tax Appeals should be filed with 30 days from the receipt of income tax demand notice. Appeal before ITAT should be filed within 60 days from the date of receipt of order from CIT Appeals.

How much amount to be deposited for filing application for stay?

20% of the demand amount is required to be deposited before making an application for grant of stay from recovery of demand.

Author: Amit Mundhra CA
Amit Mundhra FCA is a Fellow member of the Institute of Chartered Accountant of India. He is senior partner in Karnani & Co., Chartered Accountants. He is having 20+ years of experience in Income Tax, GST, VAT, Accounting, Audit and Assurance field.
Need Help?