Notice of demand under Section 156

What this section is

Section 156 prescribes that any tax, interest, penalty, fine or other sum payable as a consequence of any order be served by a notice of demand. It is the trigger for recovery proceedings.

When it is issued

After every assessment, reassessment, penalty or rectification order resulting in a positive demand.

What you should do

1. 1Diarise the 30-day deadline immediately — non-payment converts the assessee into 'an assessee in default' under Section 220.
2. 2If you intend to file an appeal, pay 20% of the disputed demand and apply for stay of the balance under Section 220(6).
3. 3If the demand is genuinely payable, pay through challan ITNS-281 or 280 with the correct AY and assessment code.
4. 4Update the e-filing portal under Pending Demands so the demand status reflects correctly.

Documents typically needed

• Notice of demand and the underlying assessment order
• Computation of disputed amount vs admitted amount
• Stay application (if filing one)

Common mistakes

• Ignoring the demand because an appeal has been filed — appeal does not automatically stay the demand.
• Paying without specifying the AY / minor head — the credit then doesn't appear against the right demand.