INTEREST ON INCOME TAX REFUND
As per sec 244A (1) of Income Tax act, if any assessee’s refund amount becomes due under this Act, he shall be entitled to receive simple interest
The Interest is calculated in the following manner:
a. Where the refund is paid out of TCS under sec 206C or paid by way of advance tax or treated as paid under sec 199, during the financial year immediately preceding the assessment year, such interest should be calculated at the rate of 0.50 percent per month for every month or part of a month comprised in the period –
b. Where the refund is paid out of any tax paid under sec 140A (self-assessment tax), such interest shall be calculated at the rate of 0.50 percent per month or part of a month from the date of furnishing of income or payment of tax “whichever is later”, to the date on which refund is granted.
c. No Interest- As per the first proviso to sec 244(1A), no interest shall be payable, if the amount of refund is less than 10 percent of the tax determined under sec 143(1) or on regular assessment.
d. In any other case, such interest shall be calculated at the rate of 0.50 percent for every month or part of the month comprised in the period or period from the date or, as the case may be, date of payment of tax or penalty to the date on which refund is granted [for the purpose of this clause, date of payment of tax or penalty means the date from which the amount of tax or penalty specified in the notice of demand issued under sec 156 is paid in excess of such demand].
2. Section 244A(1A):
In case where a refund arises as a result of giving effect to an order under section 250 (Procedure in appeal) or section 254 (Orders of Appellate Tribunal) or section 260 (Decision of High Court or Supreme Court on the case stated) or section 262 (Hearing before Supreme Court) or section 263 (Revision of orders prejudicial to revenue) or section 264 (Revision of other orders), 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 3 per cent per annum, for the period beginning from the date following the date of expiry of the time allowed under section 153(5) (Time limit for completion of assessment, reassessment or recomputation in case where effect to an order under sec 250 or 254 or 260 or 262 or 263 or 264 is to be given by Assessing Officer within 3 months from the end of month in which order under these sections is received by PCCIT or CCIT or PCIT or CIT as the case may be) to the date on which the refund is granted.
3. Section 244A(1B):
In case where refund become due on account of any amount paid to the credit of Central Government under Chapter XVII-B (Deduction at source), such deductor shall be entitled to receive in addition to the amount, a simple interest calculated at the rate of 0.50 percent for every month or part of the month from the date on which claim for refund is made in prescribed form or tax is paid, where refund arises on account of giving effect to an order under sec 250 or 254 or 260 or 262 to the date on which refund is granted.
4. Section 244A(2):
If the proceedings got delayed for reasons attributable to the assessee or deductor, whether wholly or partially, the period so attributable for such delay is excluded while computing interest on refund under sub-section (1), (1A), (1B) and it shall be decided by PCCIT or CCIT or PCIT or CIT whose decision shall be final.
5. Section 244A(3) :
Where as a result of an order under sec 115WE or 115WF or 115WG (related to fringe benefits tax) or sec 143(3) (Scrutiny Assessment) or sec 144 (Best Judgement Assessment) or sec 147 (Income Escaping Assessment) or sec 154 (Rectification of Mistakes) or sec 155 (Other Amendments) or sec 250, 254, 260, 262, 263, 264 or order under sec 245D(4) of Settlement Commission, the amount on which interest is payable is reduced or increased, the interest shall be increased or reduced accordingly and in case where interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand specifying the amount of excess interest paid and requiring him to pay such amount and such notice shall be deemed to be noticed under sec 156 and provisions of this act shall apply accordingly.
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