Section 245 · Refund set-off
Why was my income-tax refund adjusted?
Understand the CPC process, decide whether the outstanding demand is correct, and see the response path under Section 245 of the Income-tax Act, 1961.
What happened to you?
I got an intimation
CPC has proposed to adjust my refund against a demand.
The Section 245 process
- 1
CPC issues prior intimation proposing set-off of refund against outstanding demand
- 2
Response window shown on the e-filing portal (typically 21 days per CPC practice — not a statutory number)
- 3
Options: demand correct → pay/agree; demand wrong → disagree with reasons (rectified/appealed/paid/stay granted/wrong ID)
- 4
No response → set-off proceeds as proposed
- 5
Interest u/s 244A continues on the balance refund
What should you do?
Choose the branch that matches the demand after reviewing the CPC intimation and your records.
IF the demand is wrong, THEN disagree and select the reason that applies:
- Rectified
- Appealed
- Paid
- Stay granted
- Wrong ID
Printable IF/THEN path
IF CPC proposes to set off your refund, THEN inspect the demand. IF correct, THEN pay/agree. IF wrong, THEN disagree with the applicable reason. IF you do not respond, THEN set-off proceeds as proposed.
Need help choosing the correct return form? Use the Which-ITR Picker →
Reviewed by Harun Raaj, CA — ICAI Membership No. 238303 · Firm Reg. 19027S · Updated July 2026
Frequently Asked Questions
What is Section 245?+
Section 245 of the Income-tax Act, 1961 permits the Assessing Officer to set off a refund against an outstanding demand, after giving written intimation of the proposed adjustment.
What does a refund-adjustment intimation mean?+
It means CPC has identified an outstanding demand and proposes to use your refund to recover it. Review the demand and respond on the e-Filing portal before the displayed response window ends.
Is the 21-day response period in the Income-tax Act?+
No. The 21-day window is portal practice, not statute. The portal displays the response window for the particular intimation, so check the notice and respond promptly.
What if the demand is correct?+
If the demand is correct, choose the agree or pay route on the e-Filing portal. The refund may then be adjusted against the demand under Section 245.
What if the demand is wrong?+
Choose disagree on the e-Filing portal and select the applicable reason, such as rectified, appealed, paid, stay granted, or wrong ID. Keep supporting records and seek professional review where needed.
Does interest continue on the remaining refund?+
The Section 245 process file states that interest under Section 244A continues on the balance refund. The amount and final outcome depend on the record and the resulting order.
Statutory basis (last verified 4 August 2026)
- Section 245, Income-tax Act, 1961 — adjustment of refund against outstanding demand.
- Section 244A, Income-tax Act, 1961 — interest on income-tax refund, including interest on the balance refund stated in the configured process.
The response window shown by the portal is not presented as a statutory deadline by this tool.