ITR
Interest paid on delayed refunds
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Facts
Yes. Interest on refund is paid at 0.5% for every month or part of a month, subject to rules. Periods of delay caused by you can be excluded.
Provisions and law
- Sec 244A, Income-tax Act 1961 (now Sec 437, Income-tax Act 2025)Interest on refund at 0.5% for every month or part of a month, less periods of delay caused by the taxpayer.
Analysis
Say your refund is ₹50,000 and it is paid 8 months after the start date. Interest is about ₹2,000. This interest is taxable in the year you receive it and shows in AIS. Report it in next year's return.
Conclusion
- Check the interest shown in the intimation.
- Match it with the amount credited.
- Note it for next year's return.
- Report it as other income.
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