Income Tax Refund: Many taxpayers are waiting to receive income tax refund. Taxpayers keep expecting interest due to refund not coming on time. There is a provision for interest on delayed refunds in the Income Tax Act too, but it is not necessary that this happens every time. In many cases, despite getting late refund, taxpayers do not get even a single rupee of interest.
There is a rule to pay interest on late refund
Under Section 244A of the Income Tax Act, interest at the rate of 6 percent per annum is given on delayed refunds. Its calculation is done from 1st April of the assessment year till the day of refund credit. However, there are some situations in which the taxpayer does not get interest despite delay in refund.
In recent times, refund processing has become slow due to various reasons like incorrect bank details, Aadhaar and PAN card not being linked, wrong claim or fake claim in the return or wrong deduction information etc. CBDT Chairman Ravi Aggarwal has said that the tax department is closely investigating the returns containing fake claims and wrong deductions. Due to this, processing is taking more time.
Why is interest not given?
CA (Dr.) Suresh Surana says that just because there is a delay in refund, it is not necessary that the interest will be credited automatically. He says, of course, there is a provision of interest on delayed refund in Section 244A of Income Tax Act, but despite the delay, many times the taxpayer does not get interest. The special thing in this is whether the taxpayers themselves are the reason for the delay in processing. “If the delay in processing or issuing the refund is caused by the taxpayer, no interest is paid,” says Dr Surana.
This especially happens when there is incomplete information in the return or there is a mistake in the details given. In this situation, the assessing officer asks for additional details and when a taxpayer responds late to the notice or queries, the delay is considered to be their own fault and interest is not paid.
This is also the reason for not getting interest
When refund is received from self-assessment tax under section 140A, the interest rules are more stringent. Surana explains, if the refund amount is due to excess payment of tax, then the refund will not be given. This means that if a taxpayer has paid more tax than he wanted and is later claiming a refund, then he will not get interest on that excess amount. Apart from this, if the refund amount is less than Rs 100, then interest is not available on it.
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