Sub-section (1) requires the Assessing Officer, when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, to serve on the assessee a notice of demand in the prescribed form specifying the sum payable. Sub-section (2) deems an intimation to be such a notice: where a sum is determined to be payable by the assessee, the deductor or the collector under section 270 or section 399, the intimation under those sections is a notice of demand for the purposes of this section.
Sub-section (3) defers payment in one case. Where the assessee's income for a tax year includes income of the nature specified in section 17(1)(d), and the specified security or sweat equity shares referred to there were 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 that income included in the notice of demand is payable within fourteen days of the earliest of three events: the expiry of sixty months from the end of the relevant tax year; the date of sale of the specified security or sweat equity share by the assessee; and the date of the assessee ceasing to be the employee of the employer who allotted or transferred it.
Why it is there
An order under the Act determines a liability but does not by itself demand payment; sub-section (1) is the step that converts one into the other, in a prescribed form and for a specified sum. Sub-section (2) saves the machinery from being read as excluding processing and assessment intimations. Sub-section (3) addresses a specific hardship — an employee of a start-up taxed on shares he has neither sold nor been paid for — by putting off the payment date until money or an exit event arrives, or five years pass.
Who it applies to
An assessee on whom a sum is payable in consequence of an order under the Act
A deductor or a collector on whom a sum is determined to be payable under section 270 or section 399
An employee of an eligible start-up referred to in section 140 holding specified securities or sweat equity shares taxed under section 17(1)(d)
The Assessing Officer serving the notice of demand
The figures, and what each one turns on
Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
What
Figure
The condition on it
Where
Time to pay the deferred start-up share tax
Fourteen days
Running from the earliest of the three events in clauses (a) to (c), not from the date of the notice of demand
Sub-section (3)
Longest permitted deferral
Sixty months from the end of the relevant tax year
One of the three events; the fourteen days run from whichever event happens earliest
Sub-section (3)(a)
What this means in practice
An intimation is a demand. Sub-section (2) puts an intimation under section 270 or 399 on the same footing as a notice served under sub-section (1), so a deductor or collector who receives one has been served with a notice of demand for the purposes of this section. The deferral in sub-section (3) is narrow and easily misread: it postpones only the tax or interest on the section 17(1)(d) income relating to the specified security or sweat equity share, not the rest of the demand, and it requires the current employer to be an eligible start-up referred to in section 140 and to have been the allotter or transferor. The sixty months is a ceiling, not the payment date — a sale of the shares or the end of the employment starts the fourteen days running at once, whichever comes first.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
An employee of an eligible start-up is taxed on a perquisite under section 17(1)(d) for the tax year ending 31 March 2027 on shares allotted to him by that employer. The notice of demand carries the tax on that perquisite, but under sub-section (3) it is payable within fourteen days of the earliest of sixty months from 31 March 2027, the date he sells the shares, and the date he ceases to be that employer's employee. If he sells the shares in June 2028, the fourteen days run from that sale — the sixty-month outer limit never comes into play.
Where you meet this section
This is the notice of demand itself, served in the prescribed form after an assessment or other order, and the intimation under section 270 or 399 that sub-section (2) treats as the same thing. It is the document that fixes what is payable and starts the recovery machinery running.
The words themselves
the Assessing Officer shall serve upon the assessee a notice of demand in such form, as may be prescribed, specifying the sum so payable
Section 289(1), Income-tax Act, 2025.
the intimation under the said sections shall be deemed to be a notice of demand for the purposes of this section
Section 289(2), Income-tax Act, 2025.
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
Section 289(3), Income-tax Act, 2025.
What people get wrong
Treating an intimation as something less than a demand. Sub-section (2) deems an intimation under section 270 or 399 to be a notice of demand.
Reading sub-section (3) as deferring the whole demand. It defers only the tax or interest on the section 17(1)(d) income relating to the specified security or sweat equity share.
Taking the sixty months as the date of payment. Fourteen days run from the earliest of the three events in clauses (a) to (c), so a sale or a resignation accelerates payment.
Applying the deferral to any employer's share plan. Sub-section (3) requires the current employer to be an eligible start-up referred to in section 140 and to have allotted or transferred the security or share.
Expecting a demand without an order. Sub-section (1) operates where a sum is payable "in consequence of any order passed under this Act"; sub-section (2) supplies the intimation cases.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
Rules of the Income-tax Rules, 2026 that work section 289. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 15/2024 — Order under section 119(1) of the IT Act, 1961 fixing the monetary limits of the Income-tax authorities in respect of reduction or 2024-11-04
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Notification: 17 Date of Issue: 26/2/2013 — Section 120 of the Income-tax Act, 1961 - Income-tax Authorities - Jurisdiction of - Specified CIT to Exercise Concurrent Powers & 2013-02-26
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 289. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
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What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.
