Change in the Interest on Tax Refunds under Indian Income Tax Law : Clause 437 of the Income Tax Bill, 2025 Vs. Section 244A of the Income-tax Act, 1961

Interest on tax refunds: prescribed entitlement and computation rules ensure compensation for delayed refunds and administrative resolution.

Clause 437 provides a statutory entitlement to interest on delayed tax refunds, specifying commencement dates for interest based on refund source (advance tax, TCS, tax treated as paid, self-assessment, rectification or excess payment), a materiality threshold exempting trivial refunds, extension of entitlement to deductors, exclusion of periods of delay attributable to the taxpayer or deductor, additional interest for appellate or revision order-related refunds, adjustment and recovery mechanisms for varied refund amounts, and administrative resolution of disputes on excluded periods by a senior tax authority.