The Central Board of Direct Taxes (CBDT) has empowered the Central Processing Centre (CPC) to adjust tax demands against tax refunds due to assessees. According to a report by Taxmann Advisory and Research Team, this authority allows the Income Tax Department to offset any outstanding tax demand against refunds claimed by taxpayers. This mechanism ensures that taxpayers cannot avoid their tax obligations by claiming refunds while having unpaid tax dues.
After filing and verifying their Income Tax Returns, taxpayers may receive outstanding tax demand notices from the Income Tax Department. As reported by Taxmann Advisory and Research Team, the department processes returns and issues demand notices when tax is found to be due from taxpayers. The process continues even after clicking the final ITR filing submit button, requiring taxpayers to address any outstanding obligations. For AY 2026-27, refunds may be adjusted against pending tax dues from previous years, meaning that current year refunds can be reduced or fully offset against unpaid tax liabilities from earlier assessment years.
The e-filing portal provides taxpayers with three distinct response options based on their circumstances. According to the report, taxpayers can choose to acknowledge correct demands and make payments through the e-Pay tax page, or submit challan details if they have already paid the tax. Alternatively, taxpayers can dispute the demand by selecting 'Add Reasons' and providing specific reasons for disagreement along with relevant details. For AY 2026-27, taxpayers must verify notices promptly and respond through the e-filing portal to avoid refund delays and compliance issues.
For taxpayers who have already paid the demanded amount, the process involves adding challan details including challan type, payment amount, BSR code, serial number, and payment date. As reported by Taxmann Advisory and Research Team, taxpayers must upload a copy of the challan as a PDF attachment and receive a success message along with a Transaction ID for future reference. This documentation ensures proper tracking and resolution of the tax demand.
