When does Section 244A interest apply on ITR refunds?

Section 244A interest applies when the IT Department delays processing your refund. For refunds from TDS or advance tax, interest runs from April 1 of the Assessment Year. For refunds from self-assessment tax, interest runs from the date of payment. It stops on the date the refund order is passed by CPC.

What is the interest rate under Section 244A?

The interest rate under Section 244A is 0.5% per month, or part of a month. Even one day into a new month counts as a full month. This works out to 6% per annum - simple interest, not compound.

Is ITR refund interest taxable?

Yes. Interest received under Section 244A is fully taxable as Income from Other Sources under Section 56 of the Income Tax Act. You must declare it in your ITR for the financial year in which it is received or credited. There is no exemption.

Why didn't I receive Section 244A interest even though my refund was delayed?

Section 244A(2) withholds interest for any period where the delay was caused by the taxpayer - not responding to notices, filing errors requiring correction, or pending documents you failed to submit. Only department-caused delay earns interest. If the delay was entirely on the department's side and no interest was paid, raise a grievance on incometax.gov.in.

How do I know if Section 244A interest was added to my refund?

Your Section 143(1) intimation notice (emailed by CPC after processing) shows a line-item breakdown of your refund including any Section 244A interest. You can also compare the bank credit amount with the excess tax you originally paid - the difference is the interest component.

ITR Refund Interest Under Section 244A - How It Works and How to Calculate It

Last updated: March 4, 2026 Refund Section 244A

When the Income Tax Department takes too long to process your refund, you're entitled to interest on the delayed amount. This interest is governed by Section 244A of the Income Tax Act. It's automatic, calculated at 0.5% per month, and it's your right - not a discretionary bonus.

What Is Section 244A?

Section 244A mandates that the Income Tax Department pay simple interest on refunds that are delayed. It applies to all taxpayers - individuals, HUFs, firms, and companies - whose refund arises from excess advance tax paid, TDS/TCS deducted, or self-assessment tax.

Rate: 0.5% per month (or part of a month) = 6% per annum. Simple interest - does not compound.

When Does Section 244A Interest Apply?

The start date depends on how the excess tax was paid:

Source of Excess Tax	Interest Starts	Interest Ends
Advance tax or TDS/TCS deducted	April 1 of the Assessment Year	Date refund order is passed
Self-assessment tax paid	Date of self-assessment tax payment	Date refund order is passed

Part-month rule: Even one day into a new month counts as a full month. If your refund order is passed on October 3, October counts as a complete month for interest purposes.

How to Calculate Section 244A Interest

The formula: Interest = Refund Amount x 0.5% x Number of Months

Example Calculation

Refund amount (excess TDS)Rs. 50,000

Interest start dateApril 1, 2025 (AY 2025-26)

Refund order passedOctober 15, 2025

Months counted (Apr to Oct, part of Oct = full month)7 months

Interest = 50,000 x 0.5% x 7Rs. 1,750

Total refund creditedRs. 51,750

When Is Section 244A Interest NOT Paid?

Section 244A(2) withholds interest for any period where the delay was caused by the taxpayer:

Not responding to notices or requests for information from the IT Department
Filing errors or omissions that required rectification
Pending documents you failed to submit on time
Scrutiny proceedings where the taxpayer's conduct prolonged the case

Only department-caused delay earns interest. The taxpayer-caused period is excluded from the calculation.

Is Refund Interest Taxable?

Yes - fully taxable. Interest under Section 244A is taxable as Income from Other Sources under Section 56. You must declare it in your ITR for the financial year in which it is received or credited. Tax applies at your applicable slab rate. There is no exemption.

If you received Rs. 1,750 in refund interest in FY 2025-26, add it to "Income from Other Sources" when filing your ITR for AY 2026-27. It may also appear in your AIS (Annual Information Statement).

How to Verify If Interest Was Added to Your Refund

Your Section 143(1) intimation (emailed by CPC after processing) shows a line-item breakdown including Section 244A interest
Compare the amount credited to your bank with the excess tax you paid - the surplus is the interest
Log in to incometax.gov.in → e-File → Income Tax Returns → View Filed Returns → select the AY → download the intimation

What to Do If Interest Was Not Paid

If your refund was significantly delayed through no fault of yours and no interest was credited:

Confirm the refund amount in your 143(1) intimation matches what was credited to your bank
Raise a grievance at incometax.gov.in → e-File → Grievances → Submit Grievance
Select category "Refund" and cite Section 244A interest specifically
Helpline: 1800-103-0025 (toll-free, Mon-Fri, 8am-8pm)

Full guide: 8 reasons your ITR refund is delayed and what to do

Frequently Asked Questions

Does Section 244A interest apply even if I filed my return on time?

Yes. Filing on time is not the determining factor. Interest is based on how long the department takes to process your refund after April 1 of the Assessment Year - regardless of when you filed. A timely filed return still earns interest if CPC is slow.

Is Section 244A interest simple or compound?

Simple interest only. The 0.5% per month is always calculated on the original refund amount - it does not accumulate on itself month over month.

What if my refund interest appears in my AIS?

If Section 244A interest appears in your AIS (Annual Information Statement), it confirms the department has recognised and paid the interest. You must declare this amount as Income from Other Sources in your next ITR. The AIS entry is effectively a pre-filled disclosure.

If I file a revised return, does the interest calculation change?

A revised return can affect the interest if it changes the refund amount. Interest is recalculated on the revised figure. For any additional refund resulting from the revision, the interest start date is typically the date the revised return is filed - not April 1.

Is there a minimum refund amount for Section 244A to apply?

Section 244A does not specify a minimum threshold. In practice, interest is applied on all meaningful refund amounts where CPC's processing extended beyond the normal window. Very small calculated interest amounts may be rounded down by CPC.

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