# Tax Demand Notice — Section 156

> A notice of demand under Section 156 asks you to pay the tax, interest or penalty arising from an assessment or intimation, usually within 30 days. If you don't pay or get a stay, interest under Section 220(2) runs at 1% a month and the demand can be recovered or adjusted against your refunds. If the demand is wrong, respond to it as 'disagree' with reasons on the portal and pursue rectification or appeal; a stay pending appeal is commonly granted on paying a portion — often 20% — of the disputed demand.

Practice: Tax Notices & Litigation — https://www.industax.com/services/tax-litigation/

Many outstanding demands on the portal are old, duplicated or already paid. The first step is to verify each one against challans and orders; the portal's 'Response to Outstanding Demand' lets you mark it as already paid, wrong or under appeal.

If you have appealed, apply for a stay so that recovery and refund adjustment stop while the appeal is pending. We also object when the department proposes to adjust a refund against a disputed demand.

## Key facts

| Item | Detail |
| --- | --- |
| Payment period | Usually 30 days from service of the notice |
| Interest on delay | 1% per month (Section 220(2)) |
| Refund adjustment | Refunds can be set off against outstanding demand with prior intimation |
| Stay pending appeal | Commonly on payment of about 20% of disputed demand |

## Who needs this

- Taxpayers with outstanding demands on the portal
- Taxpayers whose refunds are being adjusted
- Appellants needing a stay of demand

## What's included

- Demand verification against challans and orders
- Online response to outstanding demand
- Stay application
- Rectification or appeal filing

## Documents

- Demand notice and underlying order
- Tax payment challans
- Appeal acknowledgement (if filed)

## Process

1. **Verify** — Each demand traced to its order and payments.
2. **Respond** — Agree, disagree or mark as paid online.
3. **Protect** — Stay or rectification filed as appropriate.

## Also covers

- **Tax demand** — Verifying and contesting outstanding demands.

## FAQs

### Is the new Act's section 156 the same as this demand notice?

No. Under the Income-tax Act, 2025 the number 156 is used for a different provision. Demand notices for older years still cite Section 156 of the 1961 Act.

### What if the demand has already been paid?

Respond on the portal that it is already paid, with challan details, so it is closed.

### Can I stop recovery while my appeal is pending?

Yes, by applying for a stay of demand; stays are commonly granted on paying about 20% of the disputed amount.

## Official sources

- Income Tax e-Filing portal (e-Proceedings): https://www.incometax.gov.in/
- Income Tax Department — Acts, rules and circulars: https://incometaxindia.gov.in/

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Canonical page: https://www.industax.com/services/tax-litigation/demand-notice-156
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.