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Interest On Income Tax Refund: Know All About It

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Income tax refund accrues to those taxpayers whose tax liability for the given financial year is lower than the tax paid either by way of tax deducted at source, tax collected at source, self assessment tax etc. And the extra amount can be claimed by filing income tax return or ITR for the particular financial year within the timeline allowed for the purpose.

 

Interest On Income Tax Refund: Know All About It

Now if your income tax return has been processed and you have happened to receive the refund with or without the interest component, here are some facts about the interest component one should be knowing :

1. If the amount of refund is less than 10% of the determined tax on regular assessment then no interest shall be payable. Say in case of TDS of Rs. 5.98 lakh and tax liability computation of Rs. 5.48 lakh, the refund amount is less than 10% of the tax payable value so no interest shall be payable.

2. In case the refund exceeds the limit, the taxpayer will get due interest:

"If refund arises out of TDS, TCS or advance tax paid during the financial year, the interest shall be calculated at the rate of 0.5% for every month or part of month". Interest calculation is started from the beginning of April of an assessment year.

3. Also the payment of interest on refund depends on the ITR furninishing date:

If ITR has been furnished by the assessee on or before the due date, the interest shall be payable from April 1 of the Assessment Year to the date on which the refund is granted. If the tax return is not furnished by the due date, the interest shall be payable from the date of furnishing return of income to the date on which refund is granted.

GoodReturns.in

Read more about: itr income tax refund
Story first published: Wednesday, April 21, 2021, 15:30 [IST]
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