From TDS To Self Assessment Tax-- How Much Interest Is Paid On Refund Delays By ITR? Find Out

Several taxpayers who completed their ITR months ago are waiting for their refunds despite the ITR filing due date for the assessment year 2025-26 ending on September 16.  

Under Section 244A of the Income Tax Act, taxpayers whose refunds are delayed due to circumstances beyond their control are entitled to statutory interest on the unpaid amount. The Income Tax department pays an interest of 0.5% per month on delayed refunds under Section 244A. 

The IT department's rules regarding interest on delayed refunds are summarized here.

Rate of Interest: 0.5% per month or part of the month  Period for which interest is receivable: From 1 April of the assessment year to the date of granting a refund.

Interest rate: 0.5% per month or part of the month Period for which interest is receivable: From the date of furnishing of return or payment of taxes, whichever is later to the date on which the refund is granted.

Interest rate: 0.5% per month or part of the month Period for which interest is receivable: From the date of payment of tax/penalty to the date on which the refund is granted.

Interest rate: 0.5% per month or part of the month  Period for which interest is receivable: From the date on which the claim for refund is made or tax is paid where a refund arises on account of giving effect from the order under Sections 250/254/260 to the date on which the refund is granted.

Interest is paid on delayed refunds only if the delay has not been caused by the taxpayer. The taxpayer may not be eligible for interest if they provide incorrect information or respond late to notices. Refunds resulting from excess self-assessment tax under Section 140A also do not attract interest. Refunds below Rs 100 are not eligible.

Tax refunds often get delayed due to mismatches between ITR data and Form 26AS, AIS or TIS. The other reasons include bank accounts not being pre-validated, PAN not linked to Aadhaar, pending scrutiny or verification, outstanding tax liabilities and system-based delays.