Follow Us:

Income Tax Demand Paid by User in India But Not Tagged the Challan in Demand: A Comprehensive Guide

India’s Income Tax Act of 1961 governs the taxation of income in India. Income tax is levied on income earned by various kinds of entities ranging from individuals to companies. All taxed entities are required to pay their taxes either directly or through challans. A challan is a receipt used to deposit taxes and duties to the government of India. This article will examine the issue of income tax demand paid by an individual, but the challan tag is not included, resulting in the demand continuing to appear online in the Income Tax Department website.

In India, the income tax system is quite complex and intimidating for inexperienced taxpayers. Despite being one of the largest tax economies in the world, the paperwork for filing taxes can be a daunting task for citizens who are not familiar with the system. It can lead to a lot of confusion and errors in the process, leading to the generation of an income tax demand. To make matters worse, tagging the challan in demand is a complicated procedure and is often missed or not done properly. This is a major issue, as it may cause a taxpayer to end up with an outstanding demand even after payment of the initial demand.

Income Tax Demand

Understanding a Challan and the Income Tax System

In the Indian tax system, a challan is a pre-printed form used to deposit taxes and duties to the government. It acts as a receipt for the money deposited and includes details of the depositor, the bank where the deposit was made, the amount deposited, and other important details. The Income Tax Department website has a facility to check the status of the challan. This is done by entering the challan serial number into the site’s search bar.

When a person fails to pay tax dues – or any other dues – in proper time or fails to file his/her ITRs, a notice may be issued to him/her. This is known as an income tax demand. Sometimes, an additional amount is charged on the taxes due, known as an interest charge. Along with the demand, a description of the tax, assessment year, and the amount that is due is mentioned. With the demand, the taxpayer must also file a challan, which is an official payment receipt from the government. The payment of the demand needs to be matched with the corresponding challan for it to be valid.

Tagging the challan in demand is critical, as without it, the payment may not show up in the government’s records. This can lead to the taxpayer still having an outstanding demand, despite having paid it in the first place. The issue is complicated further by the fact that these payments are often made at different points of time.

Q.1 What are the exceptions when challan tag is not included in payment of an Income Tax Demand?

Ans. In situations where the demand is paid without a challan tag and the payment is made through another route, the status of the demand can continue to show as incomplete. This can be caused by a number of reasons, such as delays in the payment being processed and the person responsible for processing the payment neglecting to use the challan.

There can be some instances where despite the payment of the demand, it continues to show up in the website of the Income Tax Department. This could be due to various reasons, some of which are discussed below:

1. The TAN (Tax Deduction and Collection Account Number) provided is not correct.

The TAN is a 10-digit alphanumeric code which is used to link a taxpayer account to the particular payment. It is mandatory to provide the correct TAN for any payment made to the Income Tax Department. If the TAN is not entered properly or is not correct, the payment may not be linked to the correct taxpayer’s account and may not show up in the records. It is important to ensure that the TAN is properly entered and is correct.

2. The Head of Account is not correct.

The head of account is a code which makes it possible to identify the particular tax to which the payment relates. It is important to ensure that the payment is made under the correct head of account to enable proper credit of the payment in the taxpayer’s account. If the head of account is entered wrongly or is omitted, the payment may not be credited in the taxpayer’s account and the demand may appear in the government records even after the payment is made.

3. The PAN is not entered correctly.

The PAN is a 10-digit alphanumeric code which is mandatory for filing tax returns and for making payments to the Income Tax Department. It is important to ensure that the PAN is correctly entered, as it must match with the registered PAN of the taxpayer, for the payment to be valid. Payments made under an incorrect PAN may not appear in the government records, thereby resulting in an outstanding demand.

4. The payment is not made in time.

The payment must be made within the stipulated time as mentioned in the demand notice, in order to avoid charges of interest or late payment fees. If the payment is delayed by even one day, it may not reflect in the records and the demand may continue to appear even after the payment is made.

Q.2 What is the impact of not tag the challan with respect to the Income Tax Demand?

Ans.  When the challan is not tagged, the demand will continue to show on the Income Tax Department website even if payment has been made. This can lead to a host of issues for the person paying the demand, including being contacted by the Income Tax Department about the outstanding demand and the potential for any further taxes to be withheld from their earnings until the demand is satisfactorily cleared.

Q.3 How can the payment of the demand despite an incomplete challan be resolved?

Ans.  The first step to resolve the issue is to get in touch with the person who made the payment to confirm whether the challan tag was included. If it was not, the person can contact their bank and the Income Tax Department to find out what information is needed to tag the challan. Generally, a copy of the bank statement and the challan number must be provided. Once the information is provided, the demand should clear within a few weeks.


Income tax demands in India require the payment to be made with a challan tag. In instances where the demand is paid without a challan tag and the payment is made through another route, the status of the demand can continue to show as incomplete. This can cause a number of issues for the person making the payment. To avoid any potential consequences, the person can contact their bank and the Income Tax Department to provide the necessary information so that the challan can be tagged. With the information provided, the demand should be cleared within a few weeks.

The best way to avoid any problems arising due to payments related to the Income Tax Department is to ensure that all the details are accurately filled in and all required payments are made on time. If any discrepancies are noticed or if the payment is not made in time, they must be intimated to the Income Tax Department and the payment must be made as soon as possible. Tagging the challan in demand is also very important and must not be overlooked. If there is any confusion about the payment or if the payment does not show up in the records despite being made, help must be sought from the taxable department. In order to ensure that all tax-related payments are credited properly and any demand does not appear in the website of the Income Tax Department, taxpayers should be aware of all the necessary procedures and take due precautions.


(Author can be reached at email address casharma.sharad2000@gmail.com or on Mobile No. 9990365673)

Disclaimer :  The contents of this article are solely for informational purpose. Neither this article nor the information’s as contained herein constitutes a contract or will form the basis of a contract. The material contained in this article does not constitute or substitute professional advice that may be required before acting on any matter. While every care has been taken in the preparation of this article to ensure its accuracy at the time of publication. Sharad Kumar Sharma assumes no responsibility for any error which despite all precautions may be found herein. We shall not be liable for direct, indirect or consequential damages if any arising out of or in any way connected with the use of this article or the informations as contained herein.


Author Bio

I have started my journey from a small city Saharanpur, starting a business or profession in India without God father is not possible. But after getting a good team you can do anything in this world. So we know the pain of startups and we start consulting to startups we are associated with 150+ star View Full Profile

My Published Posts

Detailed Analysis of Section 9 of the Income Tax Act, 1961 Strategies for Accessing Government of India Eligible Finance Schemes for Small and Medium Business Houses and Role of Financial Advisors From Dreams to Reality: The Promising Benefits of Stand Up India Scheme for Women Entrepreneurs Unveiling the Benefits of Government Schemes for New Project Financing through Banks – A Comprehensive Guide A Comprehensive Guide on How to Pass CA Final Exam in 2023-24 View More Published Posts

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
July 2024