Section 244A - Interest on refunds

Assessees Entitled to Simple Interest on Tax Refunds Under Income Tax Act Section Rules

Where a refund of tax becomes due under the Income Tax Act, the assessee is entitled to receive simple interest on the refund amount at specified rates, generally one-half percent per month or part thereof, calculated from defined dates depending on the nature of the tax payment and timing of the return filing. Additional interest at three percent per annum applies in certain cases following specified orders, excluding periods when the refund is withheld due to pending assessments. Interest is not payable if the refund is less than ten percent of the assessed tax. Delays attributable to the assessee reduce the interest period. Adjustments to the refund amount result in corresponding changes to the interest, with excess interest recoverable by the tax authority. Provisions apply to assessments from the 1989 assessment year onward, with specific amendments for fringe benefit tax assessments from 2006.