On account of excessive tax payments during a financial year, taxpayers are eligible to receive a tax refund. In simple words, if the tax paid by you is more than the payable amount, the government provides a tax refund. Furthermore, this refund that you receive also includes interest, as mentioned under Section 244A of the Income Tax Act.
The following sections discuss various provisions of this particular Section.
The provisions under Section 244A of the Income Tax Act talk about the interest on income tax refund. As per this Section, when a taxpayer becomes eligible for a refund, he/she shall be entitled to get an interest on the refund amount in addition to the applicable sum. Here are the details regarding the calculation of interest u/s 244A of the IT Act:
You will not receive interest on tax refund in case of delay in proceedings on the part of the deductor or assess. In such a situation, the delay period will be eliminated from the period in which interest was payable. If you have any queries regarding non-applicability of interest on IT refund, you can reach out to —
Note that the provisions of Section 244A of the Income Tax Act are not applicable if your refund amount is lower than 10% of the payable tax amount. Let us understand this through an example:
Suppose you have a tax liability of Rs. 5,28,000, where you have already paid TDS amounting to Rs. 5,78,000. You are eligible to receive a refund of Rs. 50,000. However, in this case, you will not be receiving interest on the refund amount as it is less than 10% of the payable tax.
If your IT refund is pending because of any order passed under IT appeals, such as appeals to the Supreme Court/High Court, CIT appeal and more, then you are eligible to receive an additional interest. The interest on refund under Section 244A of the Income Tax Act will be calculated at an annual rate of 3%.
The initiation of this calculation will happen after the date of expiry of the allowed time until refund generation.
If any amendments are made to Section 244A of the Income Tax Act, you might witness an increase or decrease in the applicable interest rate. Thus, the processing of interest rates will happen depending on the latest amendments.
If you have made excess payments towards income tax, the above sections detailing provisions of Section 244A of the Income Tax Act might be helpful. However, ensure to file your ITR before the due date to qualify for interest payment on the IT refund.
Ans: Know that there are no separate steps to claim an ITR refund. All you need to do is file your ITR on or before the due date. Besides receiving interest under Section 244A of the Income Tax Act 1961, you must ensure to file your taxes correctly.
Ans: Typically, you should receive your income tax refund in your bank account within 45 days of filing ITR. However, if it takes longer than anticipated, you can contact the CPC regarding the delay in payment.
Ans: Yes, the interest that you receive on your income tax refund is taxable. This is because the amount is considered a part of your income. Thus, you should mention it in your gross total income while filing ITR for a particular financial year.
Ans: If your income tax refund payment is delayed from the IT Department’s end, then as per Section 244A of the Income Tax Act, you are eligible to receive interest at a rate of 0.5% from April 1 to the date on which the refund is granted.
Ans: If you do not receive the refund within the stipulated time, you need to visit the website of NSDL. You can check the refund status through this website. Depending on the information provided there, you will either have to resubmit your details or contact the jurisdictional assessing officer regarding the delay.
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