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Notices & Litigation

A tax demand after your NRI assessment, and how to stay it

A demand is payable in 30 days, but if you appeal you can apply to pause recovery, usually on paying part of it.

Your Indian assessment has ended with a tax demand you dispute, and a Section 156 notice says pay within 30 days. As an NRI the worry is real, because the department can recover from your Indian bank accounts and property. But paying a disputed demand in full is not your only option: if you appeal, you can apply to stay the demand, and there is a well-known benchmark for how much you must pay to get that stay. Knowing how to pause recovery while you fight the demand is what protects your Indian assets. Here is how it works.
Last reviewed: 26 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

After an assessment raising a demand, you get a notice of demand under Section 156, payable within 30 days, with interest running at 1% a month if it is not paid. If you appeal, you can apply to the officer under Section 220(6) to treat you as not in default, a stay of the demand, while the appeal is pending. The standard benchmark for a stay is paying 20% of the disputed demand, but that is administrative practice, not a rigid rule, and the officer has discretion to ask for less. If you neither pay nor get a stay, recovery can follow, including against your Indian bank accounts and property, so the stay is what protects your assets while you appeal.

References on this page

  • A demand is issued under Section 156, payable within 30 days, with interest at 1% a month under Section 220(2) if unpaid
  • On appeal, you can apply under Section 220(6) to stay the demand and be treated as not in default
  • The 20% benchmark for a stay is administrative practice, not statute, and the officer has discretion to vary it
  • Unpaid and unstayed, recovery can follow against an NRI's Indian bank accounts and property

The demand, and the clock

When an assessment raises a tax demand, it is formalised in a notice of demand under Section 156, and that notice is what makes the amount payable, within 30 days of service. If you do not pay within the 30 days, interest starts running under Section 220(2) at 1% for every month or part of a month it stays unpaid, and you are treated as in default, which opens the door to recovery.

For an NRI that recovery is not abstract. The department can attach your Indian property and issue a garnishee notice to your Indian bank, requiring the bank to pay your balances over towards the demand, and it can pursue an agent or representative of yours in India. So a disputed demand left unaddressed is a genuine risk to your Indian assets. But you do not have to choose between paying it in full and doing nothing.

Staying the demand while you appeal

If you appeal the assessment, you can apply to the officer under Section 220(6) to treat you as not in default in respect of the disputed demand, which stays recovery while the appeal is pending. The officer has discretion here, and the well-known benchmark is that a stay is generally granted on your paying 20% of the disputed demand, holding the rest until the appeal is decided.

The important thing to understand is that the 20% is administrative practice set by internal instructions, not a figure written into the law, so it is not a rigid pre-condition. The officer is meant to apply an independent mind to your case, and can grant a stay on paying less where the facts justify it, for instance where the demand looks likely to be deleted on appeal. So it is worth asking for a stay on terms suited to your case, not simply assuming you must pay 20%. A practising CA files the appeal, applies for the stay under Section 220(6) on the best terms available, and heads off recovery against your Indian accounts and property while the dispute runs.

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What's involved

What the CA actually does

  1. 1

    We check the demand

    We verify the Section 156 demand and the assessment behind it, so a wrong or inflated demand is challenged, not just paid.

  2. 2

    We file the appeal

    We lodge the first appeal against the assessment, which is what opens the door to a stay of the demand.

  3. 3

    We apply for the stay

    We apply under Section 220(6) for a stay on the best terms, arguing for less than 20% where the case justifies it.

  4. 4

    We protect your Indian assets

    We head off recovery against your Indian bank accounts and property while the appeal is pending.

What to have ready

Documents you'll typically need

  • The Section 156 notice of demand and the assessment order
  • The grounds on which you dispute the demand
  • Details of your Indian bank accounts and property, for recovery risk
  • Your PAN and residency details

Your destination country can change the details

Requirements differ from one consulate, university and visa route to the next — how recent the figures must be, how long funds must have been held, and which certificates are mandatory. We assemble the documents around the exact checklist you're applying under. To see how India's tax treaty with your country of residence affects related filings, set your country below or compare all 31 countries.

Frequently asked questions

Common questions

A disputed tax demand on your NRI assessment?

Send us the demand and the order. A practising CA will appeal and apply to stay recovery on a free call, no obligation.

No card, no obligation. All certification and filing work is handled by ICAI-registered practising Chartered Accountants.