Definition of Demand Notice

• A demand notice is an official communication from the Income Tax Department.
  
• It is issued when a tax liability is determined to be outstanding or underpaid.
  
• The notice formally requests the company to pay the specified tax amount.
  
• It is issued under various sections of the Income-tax Act, 1961.
  
• The notice includes reasons, calculation, and payment deadline.
  

Reasons for Issuance

• Discrepancies between the return filed and assessment made by the department.
  
• Short payment or non-payment of advance tax, TDS, or self-assessment tax.
  
• Non-filing or defective filing of income tax returns.
  
• Adjustments under section 143(1) after return processing.
  
• Recovery after assessment, reassessment, or rectification proceedings.
  

Sections Governing Demand Notices

• Section 156 of the Income-tax Act provides for issuance of a demand notice.
  
• Section 143(1) allows for adjustment and intimation of additional tax payable.
  
• Section 147 deals with reassessment leading to demand notices.
  
• Section 200A may trigger a demand for short deduction of TDS.
  
• Penalty or interest notices may also accompany the tax demand.
  

Contents of a Demand Notice

• Name and PAN of the company and relevant assessment year.
  
• Total demand amount with breakup of tax, interest, fee, and penalty.
  
• Date of issue and due date for payment.
  
• Instructions on mode of payment and reference to applicable section.
  
• Appeal rights and rectification options, if available.
  

Action Required by the Company

• Review the demand notice details for correctness and calculation.
  
• Pay the demand within 30 days from the date of receipt.
  
• File a rectification request if the demand is incorrect.
  
• File an appeal before the Commissioner of Income Tax (Appeals) if disputed.
  

Preserve the receipt and payment details for compliance records.