Section 156 Notice of Demand: How to Respond and Seek a Stay
A notice under Section 156 demands tax, interest or penalty due under an order, payable within thirty days of service. Unpaid, it attracts interest under Section 220(2) at one per cent per month and makes you an assessee in default. Filing an appeal does not stay recovery — apply separately under Section 220(6).
What is this notice?
A Section 156 notice is the demand that follows an order — an assessment, a rectification, a penalty order or an appellate order giving effect. It is a consequence of the order, not an independent determination, so the merits are challenged by appealing the underlying order while the demand itself is managed through payment, stay or adjustment.
Common reasons it is issued
- Additions made in a scrutiny assessment under Section 143(3)
- Adjustments in an intimation under Section 143(1) producing a payable figure
- Penalty levied under Sections 270A, 271 or related provisions
- Reassessment completed under Sections 147 and 148
- Effect given to an appellate order
How to reply — step by step
- Check the figure against the order before paying anything; demands frequently omit credit for prepaid taxes or for part-payments already made.
- Diary the thirty days. Interest under Section 220(2) runs from the expiry of that period and is not waived merely because an appeal is pending.
- If you are appealing, file the appeal and a stay application under Section 220(6) together. An appeal alone does not stay recovery.
- Where a partial payment is the practical route to a stay, make it against the correct assessment year and quote it in the stay application.
- Do not leave a demand outstanding and unexplained: it can be adjusted against a future refund under Section 245, usually at the moment the refund is most needed.
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Draft my reply free →Frequently asked questions
How long do I have to pay a demand under Section 156?
Thirty days from service of the notice, unless the officer reduces the period with the prescribed approval where recovery is considered to be at risk.
Does filing an appeal stay the demand?
No. An appeal does not by itself stay recovery. Apply under Section 220(6) to be treated as not in default while the appeal is pending; administrative instructions on partial payment commonly apply.
What happens if I ignore a Section 156 notice?
You become an assessee in default: interest under Section 220(2) accrues, penalty under Section 221 may be levied, and recovery proceedings including attachment of bank accounts can follow.
Can an old demand be adjusted against my refund?
Yes, under Section 245, but only after intimation to you and an opportunity to respond. If a demand is wrong or already paid, contest it on the portal rather than waiting for the adjustment.
Related notices
This page is general information, not legal advice. Every notice turns on its own facts — verify with a professional or draft a fact-checked reply on Yukti.