Whenever an assessee gets his refund from the department which is late then he is entitled for the interest u/s 244A of the Income Tax Act , 1961. There remains a confusion of the year and calulation of the interest for the period. Period is very important . From which date and for which period assessee is entitled to interest u/s 244A. Assessee does not get the proper amount of interest . The calculation is not put correctly with the assessing officer. Department wants to give the correct interest. Lot of applications are pending with the department regarding interest. Chhose the relevant year and period for the interest portion. I have tried to explain the dates regarding effective period for claiming interest.
Interest on refunds (w.e.f. 1.4.1989 ) ( A.Yr. 1989-90)
section 244A of the Income tax Act 1961
Also see circular No. 20D(XXII-22) , Dt. 20.8.1968, Period for calculation of interest
Instruction no. 2/2007, Dt. 28.03.2007(Grant of interest on refunds under section 244A simultaneously with issue of refund,
Instruction No. 7/2013 Dt. 15.7.2013( Payment of Interest u/s 244A when assessee is not at default.
W.e.f. 1.04.1989(F.Yr. 1989-90)
earlier it was ” where . in pursuance of any order passed under this act ,refund of any amount becomes due to the assessee
w.e.f 1.4.1989(F.Yr. 1989-90)
where refund of any amount becomes due to the assessee under this act . he shall , subject to the provisions of this section , be entitled to receive, in addition to the said amount , simple interest thereon calculated in the following manner , namely
W.e.f. 1.6.2016 ( By the Finance Act 2016 ) (F.Yr. 2016-17)
(a)Where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199 , during the Financial year immediately preceding the assessment year , such interest shall be calculated at the rate of one half percent for every month or part of a month comprised in the period .___
(i)From the 1st day of April of the assessment year to the date on which the refund is granted , if the return of Income has been furnished on or before the due date specified under sub section (1) of section 139 ; or
(ii) from the date of furnishing of the return of income to the date on which the refund is granted, in a case not covered under sub clause (i) ;
(aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one half percent for every month or part of a month comprised in the period , from the date of furnishing of return of Income or payment of tax , which ever is later , to the date on which the refund is granted .
Proviso
Provided that no interest under clause (a) or clause (aa) shall be payable , if the amount of refund is less than ten percent of the tax as determined under sub section (1) of section 143 or on regular assessment .
w,e,f, 8.9.2003 ( By taxation laws ( Amendment ) Act 2003 (F.Yr. 2003-04)
(b) in any other case , such interest shall be calculated at the rate of (one half percent )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 refund is granted.
Explanation :- For the purposes of this clause .” 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 .
w.e.f. 1.6.2016 ( inserted by finance act 2016)(F.Yr. 2016-17)
(1A) In a case where refund arises as a result of giving effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly , otherwise than by making a fresh assessment or reassessment , the assessee shall be entitled to receive , in addition to the interest payable under sub section (1) , an additional interest on such amount of refund calculated at the rate of three percent 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 .
w.e.f. 1.4.2017 ( Inserted by the Finance Act , 2017)(F.Yr. 2017-18)
(1B) where refund of any amount becomes due to the deductor in respect of any amount paid to the credit of the Central Government under Chapter XVII-B, such deductor shall be entitled to receive , in addition to the said amount , simple interest thereon calculated at the rate of one half percent for every month or part of a month comprised in the period , from the date on which —–
(a) claim for refund is made in the prescribed form ; or
(b) tax is paid, where refund arises on account of giving effect to an order under section 250 or section 254 or section 260 or section 262,
to the date on which refund is granted .
(2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee
w.e.f. 1.4.2017 ( Inserted by the Finance Act 2017 ) (F.Yr. 2017-18)
or the deductor as the case may be
whether wholly or in part , the period of the delay so attributable to him shall be excluded from the period for which interest is payable under subsection 91) or (1A) or (1B), and where any question arises as to the period to be excluded it shall be decided by the Principal chief commissioner pr chief commissioner or principal commissioner or commissioner whose decision thereon shall be final .
(3) where, as a result of an order under subsection (3) of section 115W or section 115WF or section 115WG or sub section (3) of section 143 or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the settlement commission under subsection (4) of section 245 D m the amount on which interest was payable under subsection (1) has been increased or reduced ,as the case may be, the interest shall be increased or reduced accordingly , and in a case where the interest is reduced , the assessing officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount ; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this act shall apply accordingly .
(4) the provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April 1989 and subsequent assessment years .
w.e.f 1.4.2006 ( F.Yr. 2006-07 )
Proviso
( Provided that in respect of assessment of fringe benefits , the provisions of this sub section shall have effect as if for the figures “1989” , the figures “2006” had been substituted . )
Author Bio
how we can claim interest on income tax refund if the actual refund is not given within reasonable time from the date of order granting the refund ?
You can write to the authority granting the refund by way of rectification application and therein give reference to the order and attach calculation sheet when you were entitled to the refund , when it has been granted , no of months for the delay and interest there on . You AO shall consider the same and interest shall be given to you . .