Notice of demand
[Section-289 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 289(1) of Income Tax Act 2025
289(1) When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in such form, as prescribed, specifying the sum so payable.
Section 289(2) of Income Tax Act 2025
289(2) Where any sum is determined to be payable by the assessee or the deductor or the collector under section 270 or 399, the intimation under the said sections shall be deemed to be a notice of demand for the purposes of this section.
Section 289(3) of Income Tax Act 2025
289(3) Where the income of the assessee of any tax year includes income of the nature specified in section 17(1)(d) and such specified security or sweat equity shares referred to in the said section are allotted or transferred directly or indirectly by the current employer, being an eligible start-up referred to in section 140, the tax or interest on such income included in the notice of demand referred to in sub-section (1) shall be payable by the assessee within fourteen days—
- (a) after the expiry of sixty months from the end of the relevant tax year; or
- (b) from the date of the sale of such specified security or sweat equity share by the assessee; or
- (c) from the date of the assessee ceasing to be the employee of the employer who allotted or transferred him such specified security or sweat equity share,
- whichever is the earliest.
FAQs on Section 289 of Income Tax Act 2025
What is a Notice of Demand under Section 289(1) of the Income Tax Act, 2025?
A Notice of Demand is issued by the Assessing Officer to the assessee specifying the amount payable as tax, interest, penalty, fine, or any other sum as a result of an order passed under the Act.
When is a Notice of Demand served to an assessee?
It is served when any amount becomes payable by the assessee due to an order passed under the provisions of the Income Tax Act, 2025.
What is the prescribed format for a Notice of Demand?
The format of the notice is prescribed under the rules framed under the Income Tax Act, 2025.
Can an intimation under other sections also be treated as a Notice of Demand?
Yes, as per Section 289(2), any intimation under Section 270 or Section 399 that determines a sum payable by the assessee, deductor, or collector is deemed to be a Notice of Demand.
What happens if income includes ESOPs from an eligible start-up?
Section 289(3) provides a special timeline for the payment of tax or interest on such income related to specified securities or sweat equity shares issued by an eligible start-up under Section 140.
When must the tax be paid on ESOPs from eligible start-ups?
The tax must be paid within 14 days of the earliest of the following:
- Expiry of 60 months from the end of the relevant tax year,
- Date of sale of the security or share by the assessee,
- Date when the assessee ceases to be an employee of the employer who issued the shares.
Is the Notice of Demand mandatory for all types of dues?
Yes, whether the amount payable is due to tax, interest, penalty, fine, or any other sum under the Act, a Notice of Demand must be issued unless already deemed issued under specific sections.
Who is responsible for serving the Notice of Demand?
The Assessing Officer is responsible for serving the Notice of Demand to the assessee.
Does the assessee have the right to appeal after receiving a Notice of Demand?
Yes, the assessee may appeal against the order that led to the Notice of Demand, following the procedure laid out in the Act.
Is there any special provision for start-up employees receiving ESOPs?
Yes, employees of eligible start-ups receiving specified securities or sweat equity shares have a deferred timeline to pay taxes on such income under Section 289(3).
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