Income-tax Act, 1961Section 245
- Refund can be set off against outstanding demand after intimation
- Refund can be withheld pending assessment
Applies to FY 2025-26 (AY 2026-27) and earlier years.
IT Act 1961 → 2025 / Section 245
InterestSection 245 → Section 438
Adjustment of refunds against outstanding demands
Section 245 of the old Income-tax Act, 1961 · new section 438 under the Income-tax Act, 2025
New reference Section 438
Income-tax Act, 2025Section 438
- Same, section 438
- Set-off allowed against dues under the 1961 Act or the 2025 Act (Finance Act 2026)
- Withholding up to 60 days after assessment, with approval
Applies from tax year 2026-27 (from 1 April 2026).
What changed
Renumbered; the Finance Act 2026 expressly allows refunds under the new Act to be adjusted against old-Act demands.
Practice notes
- Respond to the intimation on the e-filing portal if the demand is disputed or stayed.
Frequently asked
Can my refund be adjusted against an old demand under the new Income Tax Act 2025?
Yes. Section 438 allows set-off against amounts payable under the 1961 Act or the 2025 Act, after written intimation.
What is section 245 called in the new Income-tax Act, 2025?
Section 245 of the Income-tax Act, 1961 corresponds to Section 438 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).
What changed in section 245 under the new Income Tax Act?
Renumbered; the Finance Act 2026 expressly allows refunds under the new Act to be adjusted against old-Act demands.
Is section 245 still applicable for FY 2025-26?
Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 245 of the 1961 Act. Section 438 of the 2025 Act applies from tax year 2026-27.