Every Citizen of India has the right to receive interest on their income tax refund under Section 244 of the Income Tax Act in the event that they have made excess payment of advance tax or an excess of TDS has been deducted on their income sources.
The Central Board of Direct Taxes (CBDT) in a mandate has stated that taxpayers ought not be denied interest on Tax refunds, except in case that the delay is brought about by the assesses. In situations where the taxpayers are ‘properly’ denied, the concerned officer is obligated to provide an explanation in writing for such disallowance.
Commonly, a tax refund is made in two cases – if an excess amount is paid as Advance Tax or excess TDS is deducted by employer or any other responsible person. Here are the conditions to claim interest on delay in Tax refunds.
- On the off chance that you have recorded your ITR before July 31 and paid excess amount as Advance Tax or TDS, you shall be paid interest from April 1 of the relevant assessment year to the date of credit of tax refund in your bank account. In case you have documented your return after July 31, interest calculation will be done from the actual date of filing income tax return.
- In case of excess payment of self-assessment tax, i.e., Advance tax, you are entitled to get interest on such tax refunds, provided you have filed your income tax return before the due date. The interest in such a case will be determined from the date of tax payment or return submission, whichever is later to the date of the actual refund date. Interest will be paid at a rate of 0.5% every month (6% yearly). If the refund due is under 10% of the tax obligation, no interest will be paid.