ITR Refund Still Not Credited? Check How Much Interest Department Must Pay You

If you filed your income tax return ( ITR ) months ago and find yourself checking your bank account every day for a tax refund, you’re definitely not alone. Even though the September 16, 2025 deadline is long past, thousands of taxpayers are still anxiously waiting for the Income Tax Department to credit their refunds.

Recently, CBDT (Central Board of Direct Taxes) Chairman Ravi Agrawal spoke to PTI and clarified that refund delays are largely due to the Department’s verification of suspicious or potentially wrongful deduction claims.

However, you must have to know the fact that, you’ve the right to seek interest for delayed refunds. If your tax refund is delayed and you are not responsible for the delay, the Income Tax Department is required to pay you interest on the delayed amount. This is provided under Section 244A of the Income Tax Act.

Under Section 244A, the department pays simple interest at 0.5% per month (6% per annum) on delayed refunds. If you filed your return on or before the due date, interest is calculated from April 1 of the assessment year until the refund is issued. If the return was filed after the due date, interest is calculated from the actual filing date up to the payment date.

Regardless of whether the return is examined or not, interest under Section 244A is due at a rate of 6% annually and keeps accruing as long as the refund is not paid. Unless the delay is directly caused by the taxpayer, the scrutiny proceedings do not halt the interest clock.

1. Refunds Arising From TDS, TCS, or Advance Tax - Section 244A(1)(a)

If your refund is due to excess TDS, TCS or advance tax paid, the law grants you 0.5% interest per month depending on your filing timeline. If you filed on time, interest runs from April 1 of the assessment year. If you filed late, the clock starts ticking from the filing date. However, no interest is payable if the refund is less than 10% of the total tax liability computed during assessment.

2. Refund From Self-Assessment Tax – Section 244A(1)(aa)

If you paid extra tax voluntarily under Section 140A (self-assessment tax), you also earn 0.5% monthly interest. The calculation begins from the later of (i) the date you filed your return, or (ii) the date you made the self-assessment tax payment, and continues until the refund is released. This too is subject to the rule that no interest is paid if the refund is below 10% of assessed tax.

3. Other Refund Situations - Section 244A(1)(b)

For refunds arising from other payments, like excess tax paid toward a demand or penalty, the Department pays interest from the actual date of payment until the refund is issued. Here, the Act specifies that the “date of payment” means the date tax was paid pursuant to a Section 156 notice of demand.

4. Extra 3% Interest for Appeal/Revision Cases - Section 244A(1A)

If your refund arises because you won an appeal before the CIT(A), ITAT, High Court, or Supreme Court, or through revision under Sections 263 or 264, you are entitled to an additional 3% interest per annum. This applies when the Department fails to issue the refund within the statutory deadline prescribed under Section 153(5). Thus, taxpayers in appellate cases receive a total of 9% annual interest.

5. Interest to Deductors (TDS Depositors)- Section 244A(1B)

Even deductors such as employers or businesses depositing TDS can claim interest at 0.5% per month if excess TDS deposited to the government is refundable. Interest is calculated from the date of filing the refund application or the date of tax payment, whichever is applicable.

Situations Government need not to Pay Interest

While interest is payable on most delayed refunds, there are clear exceptions. As per Section 244A(2) of the income tax act, you won’t receive interest if the delay is directly attributable to you such as failing to verify your ITR, submitting incorrect information, not responding to departmental notices, or filing the return late. But if the delay is entirely on the Department’s side, the compensation is mandatory.

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