Last Updated on February 11, 2026
The framework for remitting and discharging tax obligations under the outstanding demand uses an all-digital system administered through the Income Tax Department’s online e-filing website. When you sign in to the portal, users and taxpayers can look up the pending demands, provide clarifications and responses, and settle dues online to ensure statutory compliance, streamline processes, and maintain financial accountability.
What does an Outstanding Tax Demand mean?
Outstanding tax demands are raised by the Centralised Processing Centre or the Assessing Officer and can be paid on the e-filing portal.
The Income Tax Department issues an outstanding demand when it detects unpaid tax, interest, or penalties. This may result from:
- Inaccuracies in the return filing or discrepancies in reported income.
- Adjustments made while processing under Section 143 (1).
- Demand notices are the department’s way of getting back what’s owed under Section 156.
An outstanding demand means the tax department has officially asked you to pay up, under Section 156 of the Income Tax Act.
What Happens If you Do Not Act?
Ignore these notices long enough, and things get messy. They’ll slap on penalties, add interest, and might even freeze your bank account if you miss the deadline. Interest at 1% a month kicks in thanks to Section 220(2). And if you’re expecting a tax refund? The department just takes what you owe straight from that.
So, login online and clear your dues within 30 days. That’s how you avoid extra charges and headaches.
Stepwise Instructions for Outstanding Demand Payment
You can make a payment of your Income Tax Demand through the e-filing portal in the following three ways.
- Directly pay the full demand amount by clicking on the “Pay Now” option for the respective DRN (Demand Reference Number) on the “Response to Outstanding Demand Page”.
- Partially pay the demand amount using the “Pay Now” option while submitting the response to the outstanding demand (in case you partially agree with the outstanding demand).
- You can also use the e-Pay Tax Functionality for the purpose of making the payment of outstanding tax demands.
How to Make Payment of the Full Demand Amount through Response to the Outstanding Demand Tab
- Go to the e -filing portal Homepage and click Login
- Enter your valid user ID and password. (Present your Aadhar/PAN as User ID)
- After logging in, visit the Pending Actions tab and click on “Response to Outstanding Demand” to view your Demand Notice with the Demand Reference Number.
- Download the Notice by tapping on the Download button.
- Click on “Pay Now” to pay the demand. You will be redirected to the e-Pay Tax page, where you can carry out the tax payment.
- You can tap on Download to check the Notice and then click on Pay Now to pay the demand
- The Demand amount will be condensed; click “Continue”. Here, you can check the Demand Reference Number, the relevant assessment year, and the amount, then press the Continue button. You need to select the payment method from the available options (Net Banking, Debit Card, Pay at Bank Counter, RIGS/NEFT, Payment Gateway, including UPI), then click the “Continue” button.
- Check the payment details and tap “Pay Now. This redirects you to the Bank’s website, where you can execute the payment.
- Once the payment is successful, you will receive an acknowledgement with a CIN (Challan Identification Number). Download and save the acknowledgement for future reference.
How To Make Payment of the Partially Paid Demand Amount through Response to the Outstanding Demand Tab
You can once again access the Response to Outstanding Demand tab and press the “Submit Response” button to Response to Outstanding Demand.
On the Response page, you can select “Disagree with Demand” (Either in Full or in part) and press the Submit button. Here you can continue or skip. You need to present the reasons for disagreement and click on “Continue”. You also get the preference to skip the reasons for disagreement.
If you tap on “Continue”, you can choose the reason for the demand not being correct and also add the reasons. To choose the reason for disagreement with the demand, press the Add Details button. Press ‘Apply’ after selecting the reasons.
After choosing the appropriate reason for your disagreement, you can hit the “Submit” button. Now you can see the payment summary and click on “Pay Now” to remit the payment of the balance demand amount.
Once again, you will be redirected to the e-pay tax functionality, where you will be required to select the mode of payment and then make the payment.
After the selection of the mode of payment and remitting the payment, you receive an acknowledgement with a CIN (Challan Identification Number). You can download and save the acknowledgement for future reference.
Payment of your Outstanding Tax Demand Using e-Pay Tax Functionality
The e-pay tax functionality also constitutes a post-login functionality.
Visit the e-filing portal, log in, go to the e-file section, and then press e-Pay Tax in the e-file menu. Click on Plus New Payment. You can select the Demand Payment from the Regular Assessment Tab and then proceed.
You can search for the Demand Reference Number (DRN). Alternatively, search by DRN. Click “Demand Payment under Minor Head 400 – without DRN”.
In case you choose to make the payment for Demand Without DRN, you would be required to select the relevant Assessment Year. Add the amount of Tax, Surcharge, Cess, Interest or Penalty and click on “Continue”.
You would be required to choose the mode of payment and then make the payment. After successful payment your will receive an acknowledgement with a CIN (Challan Identification Number). You can download and save the acknowledgement for future reference.
Practical Pointers
- Make sure to double-check the demand details prior to making payment.
- If you hold a different opinion, submit a rectification request or an update appeal.
- Certify that the payment is executed within the timeframe set out in the notice.
Our taxation law specialists offer strategic advice on a wide range of tax matters, including income tax, company taxation, and GST, to help manage compliance with complex tax provisions.
Closing Remarks
Making payments for outstanding tax demands is simple and straightforward when you use the e-filing portal. By accessing the income tax site, looking at the pending tax request, issuing a suitable response, and remitting the payment digitally, you can stay on track with the guidelines, steer clear of extra charges and regulatory consequences and preserve your fiscal reliability.
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FAQS
1. What are the different ways I can pay the Outstanding Demand?
You can make payments online using Net Banking, Debit Card, or Payment Gateways. There are also offline ways to make a payment, such as NEFT/RTGS or pay over the counter.
2. What is the timeframe for serving a demand notice?
You are allowed 30 days to clear outstanding taxes from the receipt of the demand notice. In exceptional situations, the Assessing Officer, after approval, may change the deadline or permit you to pay in instalments.
3. Is the refund applied toward the pending/outstanding demand?
If there is no reply from your side by the mentioned date, the pending demand will be adjusted against the refund payable.
4. Can I submit a revised return after the issuance/upon the receipt of a demand notice?
As per Section 139(5) of the Income Tax Act, 1961, filing of a revised return for any errors in the original filing is permissible on or preceding 31 December or prior to the finalization of the assessment, whichever comes first. When the demand notice is issued under intimation 143(1), you are permitted to file a revised return. When the demand notice arises out of a scrutiny assessment order under Section 143(3), you cannot file a revised ITR.
5. Can I omit paying the income tax notices?
No, you will be liable for criminal charges, fees, penalties and proceedings for demand enforcement.
