(e) Interest on refunds [Section 244A]

Effective from: 1st June, 2016

(i) Period for which interest on refund is payable:

An assessee is entitled to interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, for the period beginning from 1st April of the assessment year and ending on the date on which refund is granted.

(ii) Differential period for interest on refund in cases where return is filed beyond the due date under section 139(1)

For ensuring filing of return on or before the due date under section 139(1), section 244A has been amended to provide for interest@1½% for every month or part of a month for the period specified in the following table for each of the cases mentioned in column (2) hereunder –

	Case	Period for grant of interest on refund
		Beginning from	Ending with
(1)	(2)	(3)	(4)
(a)	Where the refund is out of TCS u/s 206C or paid by way of advance tax or treated as paid u/s 199, during the financial year immediately preceding the assessment year:
	(1) Where the return is filed on or before the due date u/s 139(1)	1st April of the assessment year	Date of grant of refund
	(2) Where the return is filed after the due date	the date of filing of return
(b)	Where the refund is out of selfassessment tax paid u/s 140A	Date of furnishing return of income or payment of tax, whichever is later	Date of grant of refund
Note – However, if the amount of refund is less than 10% of tax determined under section 143(1) or on regular assessment, no interest is payable under either of the cases [(a) or (b)] mentioned above.

 

(iii) Additional interest on refund arising out of appeal effect being delayed beyond the time prescribed under section 153(5):

Where a refund arises as a result of giving effect to an order under section 250/254/260/262/264, 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 section 244A(1), an additional interest on such refund amount calculated at the rate of 3% p.a., for the period beginning from the date following the date of expiry of the time allowed under section 153(5) to the date on which the refund is granted. Further, in cases where extension is granted by the Principal Commissioner or Commissioner by  invoking proviso to section 153(5), the period of additional interest, if any, shall begin from the expiry of such extended period.

Circumstance	Period9
Where a refund arises as a result of giving effect to an order under section 250/254/ 260/262/264, wholly or partly, otherwise than by making a fresh assessment or reassessment	From the expiry of 3 months from the end of the month in which the order u/s 250 / 254/260/262 is received, or order u/s 263 or 264 is passed, by the PCC/CC/PC/CIT.
Where extension is granted by the Principal Commissioner or Commissioner by invoking proviso to section 153(5)	From the expiry of 9 months from the end of the month in which the order u/s 250 / 254/260/262 is received, or order u/s 263 or 264 is passed, by the PCC/CC/PC/  CIT.