Budget 2016: Section 244A inter alia provides that an assessee is entitled to interest on refund arising out of excess payment of advance tax, tax deducted or collected at source. It also provides that the period for which the interest is paid on such excess payment of tax begins from the 1st April of the assessment year and ends on the date on which refund is granted.
In order to ensure filing of return within the due date it is proposed to amend section 244A to provide that in cases where the return is filed after the due date, the period for grant of interest on refund may begin from the date of filing of return.
In the interest of fairness and equity, it is further proposed to provide that an assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever is later, to the date on which the refund is granted. For the purpose of determining the order of adjustment of payments received against the taxes due, the prepaid taxes i.e. the TDS, TCS and advance tax shall be adjusted first.
It is also proposed to provide that where a refund arises out of appeal effect being delayed beyond the time prescribed under sub-section (5) of section 153, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1) of section 244A, an additional interest on such refund amount calculated at the rate of three per cent per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted. It is clarified that in cases where extension is granted by the Principal Commissioner or Commissioner by invoking proviso to sub-section (5) of section 153, the period of additional interest, if any, shall begin from the expiry of such extended period.
These amendments will take effect from 1st day of June, 2016.
Clause 90 of Finance Bill 2016
Clause 90 of the Bill seeks to amend section 244A of the Income-tax Act relating to interest on refunds.
Sub-clause (A) of the said clause seeks to amend clause (a) of sub-section (1) of the said section.
The aforesaid section provides that an assessee is entitled to interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, etc.
Further, it is provided that the period for which the interest is paid on excess payment of tax begins from the 1st April of the assessment year and ends on the date on which refund is granted.
It is proposed to amend the said section to provide that in cases where the return is filed after the due date, the period for grant of interest on refund shall begin from the date of filing of return.
It is further proposed to provide that an assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever is later, to the date on which the refund is granted.
Sub-clause (B) of the said clause seeks to insert a new subsection (1A) so as to provide that that where a refund arising out of appeal effect is delayed beyond the time prescribed under subsection (5) of section 153, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1) of section 244A, an additional interest on such refund amount calculated at the rate of three per cent. per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted.
Sub-clause (C) of said clause seeks to amend sub-section (2) of the said section so as to give the reference of sub-section (1A) in the said sub-section which is consequential in nature.
These amendments will take effect from 1st June, 2016.
[Clause 90]
