Things to know about IT refund | Fusion - WeRIndia

Things to know about IT refund

Things to know about IT refund

The due date for filing an income tax return (ITR) for the financial year 2021-22 was ended by July 31. Still, taxpayers can file their belated returns till December 31.

The income tax department refunds the excess tax amount paid by taxpayers. If the advance tax or tax deducted at source (TDS) is more than the tax payable by taxpayers, the income tax department refunds the amount 20 to 45 days after the completion of the ITR process. Remember that the ITR will be processed only after the completion of the verification process.

The income tax department pays interest on the refund amount to tax payers for the delays caused in the refund process. The interest rate is 0.50 percent per month on the refund amount.

However, the interest is paid to taxpayers only if the ITR has been filed before the due date. This time, it is July 31, 2022.


Taxpayers who file their belated returns can still claim their refund amount, but they lose the opportunity to get the interest on the refund amount if they file belated returns.

Though the income tax refund is non-taxable, the interest received on the refund amount is taxable. Taxpayers have to show it under income from other sources while filing their income tax returns in the next assessment year. Taxpayers have to show it in their ITR in the financial year in which they actually received it. The interest on the refund amount is taxable as per the applicable income tax slab to a taxpayer.

The interest is calculated on the ITR refund from April 1, 2022, if a taxpayer has filed his/her ITR by the due date.

The interest on the ITR refund is calculated under section 234D. For calculation of interest, any fraction of a month will be treated as one month. Any fraction of ₹100 will be ignored.

For example, if the period is 1 month 10 days, then the interest is calculated for 2 months. Similarly, if the amount is ₹5,567, then it is rounded to ₹5,500 and ₹56 will be ignored.

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Image Reference: https://www.flickr.com/photos/gotcredit/29689796084

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