Every taxpayer awaits their income tax refund, and if it doesn’t arrive on time, it’s natural to worry. However, if the Income Tax Department delays refunds, the government pays interest for the delay. This rule is designed to protect taxpayers’ interests. Section 244A of the Income Tax Act provides for interest on refunds. If the government doesn’t pay refunds on time, it must pay interest to the taxpayer.
When does interest start
The date on which interest is paid depends on whether you filed your ITR on time. If you filed your ITR for the financial year 2024-25 by the deadline, i.e., September 16, the government will start paying interest from April 1. This interest will continue until the refund amount is credited to your bank account.
However, if you filed your ITR after the deadline, the rules change slightly. In this case, interest will be calculated not from April 1st, but from the date you filed your ITR. Therefore, late return filers may suffer some loss in interest.
Interest Rate and Calculation
The interest rate is fixed at 0.5 percent per month or part thereof, which means you earn interest at the rate of 6 percent per annum. This rate applies to the entire refund amount. This interest is also calculated on amounts you’ve already paid, such as TDS (Tax Deducted at Source), advance tax, or self-assessment tax.
However, if the delay in refund is due to your own fault, such as submitting incorrect details or incomplete documents, you will not be paid interest. However, if the delay is due to the Income Tax Department, you are guaranteed to receive interest.
What to do if you don’t receive your refund
If your refund hasn’t arrived yet, you should take immediate action. First, check the status of your refund by visiting the Income Tax e-filing portal. If necessary, contact the Central Processing Center (CPC) or your Assessing Officer.
It is extremely important to preserve all payment receipts and other important documents that may serve as evidence in any future dispute. Keep in mind that if you filed your ITR on time and correctly, you are guaranteed the right to receive government delayed interest under Section 244A.
