In this guide
An old income-tax demand should not be ignored merely because it relates to an earlier assessment year. An unresolved demand can remain against your PAN, affect future refunds and, where legally applicable, continue to attract interest or recovery action.
However, “removing” an outstanding demand does not always mean paying it. The correct action depends on whether the demand is correct, already paid, partly incorrect, covered by rectification, reduced by an appellate order or otherwise disputed.
Where to Check Outstanding Income Tax Demand
The Income Tax Department’s current 2026 portal process is:
Login → Pending Actions → Response to Outstanding Demand
The page displays outstanding demands raised either by the Centralized Processing Centre (CPC) or an Assessing Officer. Taxpayers can pay the demand, submit a response and view relevant Section 245 notices from this service.
Before responding, download and examine the underlying intimation/order. Do not decide solely from the amount appearing on the dashboard.
Three Possible Responses to an Outstanding Demand
The official portal broadly provides these situations:
| Situation | Correct action |
|---|---|
| Demand is correct and unpaid | Accept and pay |
| Demand is correct but already paid | Submit challan details |
| Demand is wrong in full or part | Disagree and provide reasons/evidence |
| CPC calculation contains apparent error | Consider rectification |
| Appeal/order has reduced demand | Submit relevant order/effect details |
The distinction is important because selecting “Demand is Correct” is consequential. The portal specifically warns that once this response is submitted, the taxpayer cannot subsequently use the outstanding-demand service to disagree with that demand.
Option 1: Demand Is Correct and Not Yet Paid
If you have checked the calculation and agree that the tax is genuinely payable:
- Select Demand is Correct.
- Choose Not paid yet.
- Click Pay Now.
- Complete payment through e-Pay Tax.
- Save the transaction and challan details.
The portal supports payment through net banking, debit card, payment gateway including UPI/credit-card options, NEFT/RTGS and permitted offline methods.
Do not assume that every successful payment makes the portal entry disappear within exactly 24 or 48 hours. Payment must be successfully reconciled against the relevant Demand Reference Number and processing times can vary.
Read more about income-tax notices.
Can Interest Keep Increasing on an Old Demand?
Potentially, yes.
For demands governed by the Income-tax Act, 1961, Section 220(2) generally provides simple interest at 1% for every month or part of a month where a notice-of-demand amount is not paid within the prescribed period.
However, do not assume that every amount displayed beside an old demand necessarily attracts identical interest. The nature of the demand, subsequent orders, payments and reductions must be checked.
If an order subsequently reduces the underlying demand, Section 220(2) also contains a mechanism for corresponding reduction of interest.
Option 2: Demand Is Correct but You Already Paid It
This is common with older demands.
Perhaps you paid tax earlier, but the challan was not correctly matched to the CPC demand.
The portal allows you to select:
Demand is Correct → Yes, Already Paid and Challan Has CIN
You can then provide details including:
- Type/minor head of payment;
- Challan amount;
- BSR code;
- Challan serial number;
- Payment date; and
- Copy of the challan.
The Department’s official manual confirms this process.
If the issue arises from a CPC tax-credit mismatch, the Department also states that a Tax Credit Mismatch Correction rectification request can be filed with paid challan details.
Paying the same demand again simply because the earlier challan is not reflected can create an unnecessary refund problem.
Option 3: The Outstanding Demand Is Wrong
If you disagree, choose:
Disagree with demand — Either in Full or in Part
The portal allows one or more reasons to be selected and supporting details to be entered. If only part of the demand is disputed, the Department advises paying the undisputed portion.
Possible factual situations may include:
- Tax already paid;
- TDS/TCS credit not considered;
- Demand already reduced by rectification;
- Revised/rectified return impact not given;
- Appellate order passed;
- Appeal effect pending;
- Stay or instalment arrangement; or
- Another specific factual/legal disagreement.
Simply clicking “Disagree” does not automatically cancel the underlying tax demand. Depending on why the demand arose, further CPC/AO processing, rectification or appeal effect may still be necessary.
When Should You File Rectification?
Rectification is appropriate where there is a mistake apparent from the record in a CPC intimation, rectification order or eligible assessment order.
The Department currently provides options such as:
- Reprocess the return;
- Tax Credit Mismatch Correction; and
- Return Data Correction, where applicable.
Where rectification rights lie with the Assessing Officer, the portal also provides Request to AO Seeking Rectification.
Rectification should not be used to make a completely new claim that should instead have been made through a revised return.
Can Your Future Refund Be Adjusted Against Old Demand?
Yes.
The Income Tax Department’s outstanding-demand FAQ specifically warns that where no response is provided, the demand can be confirmed and adjusted against a future refund.
Section 245 of the Income-tax Act, 1961 permits eligible income-tax refunds to be set off against sums remaining payable, subject to the statutory intimation procedure.
That is why an obviously incorrect old demand should not simply be left untouched until the next refund is filed.
See TaxClear’s ITR filing guides.
Frequently Asked Questions
Should I pay every outstanding demand showing on the portal?
No. First verify the underlying order, tax calculation, TDS credit and payment history. Pay only where the demand is genuinely payable.
What if I already paid but the demand is still showing?
Submit the existing challan details against the demand. If the problem is a CPC tax-credit mismatch, an appropriate rectification request may also be required.
Can I disagree with only part of a demand?
Yes. The portal permits disagreement either in full or in part. The undisputed portion should generally be paid.
Does submitting “Disagree” immediately remove the demand?
No. Your response must be considered and, depending on the case, rectification, AO action or appeal effect may still be required.
Can old income-tax demand reduce my new refund?
Yes. Outstanding eligible demand may be adjusted against a refund after the applicable Section 245 process.
Can I change my mind after accepting the demand as correct?
The e-Filing manual warns that once Demand is Correct is submitted, you cannot subsequently choose to disagree with that demand through this response facility. Verify the demand carefully before accepting it.
