Section 289
Section 289: notice of demand
Section 289 is the formal demand-notice provision - once an order under the Act makes any tax, interest, penalty, fine or other sum payable, the Assessing Officer must serve a notice of demand specifying the amount. It also carries a special, deferred payment window for tax on certain start-up ESOP income.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
The basic demand notice
When any tax, interest, penalty, fine or other sum is payable as a consequence of an order passed under the Act, the Assessing Officer must serve on the assessee a notice of demand, in the prescribed form, specifying the sum payable.
Where a sum is determined as payable by the assessee, deductor or collector under section 270 or 399, the intimation issued under those sections is itself deemed to be a notice of demand for the purposes of this section.
Deferred payment for eligible start-up ESOP income
Where an assessee's income for a tax year includes income of the nature specified in section 17(1)(d) (specified security or sweat equity shares), and those shares were allotted or transferred by an eligible start-up employer referred to in section 140, the tax or interest on that income included in the notice of demand is payable within fourteen days of the earliest of:
- the expiry of sixty months from the end of the relevant tax year;
- the date the assessee sells the specified security or sweat equity share; or
- the date the assessee ceases to be an employee of the employer that allotted or transferred the shares.
Frequently asked questions
What is a notice of demand under Section 289?
It is the formal document the Assessing Officer serves specifying the tax, interest, penalty, fine or other sum payable as a result of an order passed under the Act.
Does an intimation under section 270 also count as a notice of demand?
Yes - Section 289(2) deems an intimation under section 270 or 399 determining a sum payable to be a notice of demand under this section.
When must I pay tax on ESOP shares from an eligible start-up employer?
Section 289(3) gives fourteen days from the earliest of: sixty months from the end of the relevant tax year, the date you sell the shares, or the date you cease to be an employee of the start-up that allotted them.
Related sections
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Talk to our team about a notice of demand you've receivedLast updated 9 September 2026