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Income-tax Act, 1961 · Chapter XIX: Refunds

Section 245: Set off of refunds against tax remaining payable

The Income-tax Act, 1961 was repealed by the Income-tax Act, 2025 from 1 April 2026. The text is kept here because the judgments below apply it.

In plain words

This section allows tax officers to reduce a refund owed to a person by the amount of tax that person still owes under the Act. The officer must first give written notice of this proposed action. This process helps clear outstanding tax dues without requiring separate payments.

  • Applies when a refund is found due to any person under the Act.
  • Officers who can act include the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals), Commissioner, Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner.
  • The officer may set off the full refund or any part of it.
  • The set off is against any sum remaining payable by the person under the Act.
  • The officer must give an intimation in writing to the person before taking action.
  • This is done in lieu of payment of the refund.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

Where under any of the provisions of this Act, a refund is found to be due to any person, the [Assessing Officer], [Deputy Commissioner (Appeals)] [, or the Commissioner (Appeals) or Commissioner or [[Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner]]], as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.

[CHAPTER XIXA

Source: India Code (Legislative Department), the text of the Act as it stood before its repeal. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the section 245