1. Interest Payable on Refund of Income Tax [Section 244A (1)]
Where refund of any amount becomes due to the assessee under the Income-tax Act, he shall be entitled to receive, in addition to the said amount, simple interest on the refund calculated in the following manner:
(1) Where the Refund is arising out of excess payment of Advance Tax, TDS or TCS [Section 244A(1)(a)]
Where the refund is out of any tax—
— collected at source under section 206C or
— paid by way of advance tax or
— treated as paid under section 199 (relating to credit taken for tax deducted),
during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of 1/2% for every month or part of a month comprised in the period,—
(i) from the 1st April of the assessment year to the date on which the refund is granted. if the return of income has been furnished on or before the due date specified under section l39(1) or
(ii) from the date of furnishing of return of income to the date on which the refund is granted, in a case not covered under sub-clause (I) above.
(2) Where the Refund is out of any tax paid U/s 140A [Section 244A(1)(aa)]
Where the refund is out of any tax paid under section 140A (i.e. self-assessment tax), such interest shall be calculated at the rate of '12% for every month or part of a month comprised in the period, from the date of furnishing of return of income or payment of tax, whichever is later. to the date on which the refund is granted:
Provided that no interest under clause (a) or clause (aa) above shall be payable, if the amount of refund is less than 10% of the tax as determined under section 143(1) or on regular assessment.
(3) Where the Refund is Due to any Other Case [Section 244A(1)(b)]
Such interest shall be paid ½ % per month for every month or part of a month for the period commencing from the date of payment of lax or penalty to the date on which refund is granted.
2. Additional 3% interest on Refund in certain case, where the Refund arises as a result of giving effect to order of Appeal / Revision [Section 244A(1A)]
In a case where a refund arises as a result of giving effect to an order under section 250 (order of CIT (Appeal)) or section 254 (order of ITAT) or section 260 (order of High Court) or section 262 (Order of Supreme Court) or section 263 (Revision order by (IT) or section 264 (Revision order by CIT), wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee shall be entitled to receive, in addition to the interest payable under section 244A(1), an additional interest on such amount of refund calculated at the rate of 3% pa. (total interest @ 9% p.a.), for the period beginning from the date following the date of expiry of the time allowed under section 153(5) to the date on which the refund is granted.
Explanation,— For the purposes of this clause, 'date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand.
3. Where the Refund becomes due to the Deductor in respect of any amount paid to the credit of the Central Government under Chapter XVII-B [Section 244(1B)]
Where refund of any amount becomes due to the deductor in respect of any amount paid to the credit of the Central Government under Chapter XVII-B (relating to TDS). such deductor shall be entitled to receive, in addition to the said amount, simple interest thereon calculated @ ½ %, for every month or part of a month comprised in the period, from the date on which—
(a) claim for refund is made in the prescribed form; or
(b) tax is paid, where refund arises on account of giving effect to an order under section 250 or section 254 or section 260 or section 262,
to the date on which the refund is granted.
4. No interest for the period of delay in Refund if such delay is attributable to the Assessee [Section 244A(2)]
If the proceedings resulting in the refund are delayed for reasons attributable to the assessee or the deductor, as the case may be, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable under section 244A(1) or (1A) or (1B), and where any question arises as to the period to be excluded, it shall be decided by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner whose decision thereon shall be final.
5. Increase or Reduction of the Interest on Refund [Section 244A(3)]
Where, as a result of an order under section 143(3) or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under section 245D(4). the amount on which interest was payable under section 244A(1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly.
High Court by impugned order held that where there was delay in filing petition before CBDT for claiming refund of TDS, assessee was not entitled to claim interest on refund till date of filing such petition: however, it would be entitled to interest for period thereafter. Special Leave Petition filed against impugned order dismissed.