Section 244A - Interest on refunds - Income-tax Act, 1961

1 [Interest on refunds. 244A. (1) 2 [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 :- 13 [(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 per cent. 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 return of income to the date on which the refund is granted, in a case not covered under sub-clause (i); 19 [ Provided that where refund arises as a result of an order passed by the Assessing Officer in consequence of an application made by the assessee under sub-section (20) of section 155, such interest shall be calculated at the rate of one-half per cent. for every month or part of a month comprised in the period from the date of such application to the date on which the refund is granted; ] (aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one-half per cent. 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, whichever is later, to the date on which the refund is granted: Provided that no interest under clause (a) or clause (aa) shall be payable, if the amount of refund is less than ten per cent. of the tax as determined under sub-section (1) of section 143 or on regular assessment;] ( b ) in any other case, such interest shall be calculated at the rate of 8 [one-half per cent] 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 the 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. 14 [(1A) In a case where a 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 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.] 20 [ Provided that where proceedings for assessment or reassessment are pending in respect of an assessee, in computing the period for determining the additional interest payable to such assessee under this sub-section, the period beginning from the date on which such refund is withheld by the Assessing Officer in accordance with and subject to provisions of sub-section (2) of section 245 and ending 21 [ with the date up to which such refund is withheld ] , shall be excluded. ] 16 [ (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 per cent. 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 the refund is granted. ] (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, 17 [ 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, 15 [under sub-sections (1) or (1A)] 18 [ or (1B) ] and where any question arises as to the period to be excluded, it shall be decided by the 12 [Principal Chief Commissioner or] Chief Commissioner or 12 [Principal Commissioner or] Commissioner whose decision thereon shall be final. (3) Where, as a result of an order under 9 [sub-section (3) of section 115WE or section 115WF or section 115WG or] 10 [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 sub-section (4) of section 245D, the amount on which interest was payable under sub-section (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 :] 11 [ 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.] *********** Notes:- 1. Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 2. Substituted for Where, in pursuance of any order passed under this Act, refund of any amount becomes due to the assessee by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 3. Inserted by the Finance Act, 2005, w.e.f. 1-4-2006. 4. Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 5. Substituted for two-third per cent by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier two-third per cent was substituted for three-fourth per cent by the Finance Act, 2002, w.e.f. 1-6-2002, three-fourth per cent was substituted for one per cent by the Finance Act, 2001, w.e.f. 1-6-2001 and one per cent was substituted for one and one-half per cent by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. 6. Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 7. Inserted by the Finance Act, 2005, w.e.f. 1-4-2006. 8. Substituted for two-third per cent by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier two-third per cent was substituted for three-fourth per cent by the Finance Act, 2002, w.e.f. 1-6-2002, three-fourth per cent was substituted for one per cent by the Finance Act, 2001, w.e.f. 1-6-2001 and one per cent was substituted for one and one-half per cent by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. 9. Inserted by the Finance Act, 2005, w.e.f. 1-4-2006. 10. Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 11. Inserted by the Finance Act, 2005, w.e.f. 1-4-2006. 12 . Inserted vide THE FINANCE (No. 2) ACT, 2014 w.e.f. 1st day of June, 2013. 13. Substituted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016, before it was read as, ( a ) where the refund is out of any tax 3 [paid under section 115WJ or] 4 [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 5 [one-half per cent] for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined 6 [under 7 [sub-section (1) of section 115WE or] sub-section (1) of section 143 or] on regular assessment; 14. Inserted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016 15. Inserted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016 16 Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017 17 Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017 18 Inserted vide THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2017 19. Inserted vide THE FINANCE ACT, 2023 dated 31-03-2023 w.e.f. 01-10-2023 20. Inserted vide THE FINANCE ACT, 2023 dated 31-03-2023 w.e.f. 01-04-2023 21. Substituted vide Section 72 of the Finance (No. 2) Act, 2024 dated 16-08-2024 w.e.f. 01-10-2024 before it was read as, with the date on which such assessment or reassessment is made