Income Tax News: Taxpayers often find themselves in a predicament when it comes to managing older tax demands alongside their current tax returns. Thankfully, under Section 245 of the Income Tax Act 1961, the income tax department possesses the authority to offset an old tax demand against the current year’s tax refund. However, this process can be daunting for individuals who struggle to recall past tax details, leading to difficulties in adjusting outstanding dues. To alleviate this challenge, the Income Tax Department has introduced the Demand Facilitation Centre (DFC) in select states.
How Section 245 and DFC Operate
Section 245 grants the income tax department the ability to offset previous years’ outstanding income tax dues using the current year’s income tax refund. The DFC acts as a support system for individuals encountering difficulties in recalling information from past returns. Presently, the DFC operates in various states, including Karnataka, Punjab, Haryana, Himachal Pradesh, Tamil Nadu, Chandigarh, Delhi, and Mumbai.
Assistance Criteria for DFC
- Addressing Record Discrepancies: Taxpayers can seek assistance from the DFC when discrepancies arise in records. This includes errors in challan numbers during Income Tax Return (ITR) filing or incorrect Tax Deducted at Source (TDS) amounts due to banking errors.
- Rectification Rights Allocation: If the Section 245 notice mentions ‘rectification rights’ with the Centralised Processing Centre (CPC), individuals can seek aid from the DFC. Conversely, if the rectification right lies with the Assessing Officer (AO), taxpayers must directly approach the AO for assistance.
By leveraging Section 245 and the services of the Demand Facilitation Centre, taxpayers can navigate through outstanding tax obligations more efficiently, ensuring smoother tax compliance and refund processes.
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