Interest on refunds under section 244A of the Income-tax Act
Interest on refunds under section 244A of the Income-tax Act, 1961
CASE- I: Where the refund is out of any tax collected at source (TCS) under section 206C or paid by way of advance tax or treated as paid under section 199 (Credit for tax deducted), during the financial year immediately preceding the assessment year.
Rate of Interest on refund amount: The interest shall be calculated at the rate of 0.5% for every month or part of a month.
Time Period of Interest:
| Cases | Time Period for calculating interest on refund amount |
| If ITR filed on or before the due date under section 139(1) | From the 1st day of April of the assessment year to the date on which the refund is granted. |
| If ITR filed after the due date | From the date of furnishing of return of income to the date on which the refund is granted |
CASE- II: Where the refund is out of any tax paid under section 140A (Self-assessment Tax),
Rate of Interest on refund amount: The interest shall be calculated at the rate of 0.5% for every month or part of a month.
Time Period of Interest: From the date of furnishing of return of income (ITR) or Payment of Tax, whichever is later, to the date on which the refund is granted.
IMPORTANT NOTE:
In the above 2 Cases, no interest shall be payable, if the amount of refund is less than 10% of the tax as determined under sub-section (1) of section 143 or on regular assessment.
Case- III: In any case other than the 2 cases explained above, such interest shall be calculated at the rate of 0.5% for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted.
Explanation.—“Date of payment of tax or penalty” means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand.
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