When is Section 244A interest on refund NOT payable?

Section 244A interest is not payable in two main situations: (1) if the refund amount is less than 10% of the tax assessed — this is the minimum threshold below which no interest is due; and (2) if the delay in processing was caused by the assessee's own actions — such as not responding to notices, late filing of return, or delayed bank pre-validation — the period of such delay is excluded from the interest calculation under Section 244A(2).

Interest on Income Tax Refund under Section 244A — Rate, Calculation & Complete Guide

When the Income Tax Department owes you a refund and delays in paying it, you are entitled to interest on that refund under Section 244A of the Income Tax Act, 1961. This interest is the Department's compensation to you for holding your money beyond the permissible period. Many taxpayers are unaware that this interest is automatically calculated and paid along with the refund — and that it is also taxable in your hands as income. This guide explains Section 244A in full — what it covers, the applicable rates, how the interest period is calculated, when interest is denied, and how to claim it if you haven't received it.

What Is Section 244A?

Section 244A of the Income Tax Act, 1961 mandates that the Income Tax Department pay interest to a taxpayer on any refund of income tax that is due. The section ensures that when the government retains excess tax collected — through TDS, advance tax, or self-assessment tax — beyond a reasonable period, the taxpayer is compensated at a prescribed rate. The interest is calculated automatically by CPC and is included in the refund amount credited to your bank account along with the refund principal.

Section 244A applies to all categories of taxpayers — individuals, HUFs, firms, companies, and others — and covers refunds arising from processing of Income Tax Returns, assessment orders, appellate orders, and any other order under the Act. The refund — and the interest on it — is paid by the Income Tax Department through the SBI Refund Banker via ECS credit to the taxpayer's pre-validated bank account. The Section should be read alongside Section 237 (right to claim refund) and Section 240 (refund on order in appeal).

📌 Key Point: Section 244A interest is payable by the Department to the taxpayer. This is the opposite of interest charged on the taxpayer for late payment of tax (Sections 234A, 234B, 234C). While the Department's interest is a benefit to you, remember — it is fully taxable as "Income from Other Sources" in the year of receipt.

Rate of Interest under Section 244A

The rate of interest under Section 244A is 0.5% per month or part of a month — which works out to 6% per annum on the refund amount. The interest is simple interest, not compound interest. It is calculated on the amount of refund due — i.e., the excess tax paid over the tax determined — and not on the gross tax paid.

Parameter	Details
Rate of Interest	0.5% per month or part of a month (= 6% per annum)
Type of Interest	Simple interest — not compound
Calculated On	Amount of refund due (excess tax paid over tax determined)
Part Month Rule	Any part of a month is counted as a full month for interest calculation
Minimum Threshold	No interest if refund amount is less than 10% of the tax determined u/s 143(1) or on regular assessment
Additional Interest u/s 244A(1A)	Additional 3% per annum if refund is not made within 3 months from the end of the month in which the order granting refund is passed
Taxability	Fully taxable as "Income from Other Sources" in the year of receipt

⚠️ 10% Threshold Rule: No interest under Section 244A is payable if the refund amount is less than 10% of the total tax determined in the assessment. For example, if your assessed tax is ₹1,00,000 and your refund is only ₹8,000 (less than 10%), no Section 244A interest is payable. This threshold prevents the Department from paying interest on very small refund amounts.

Two Scenarios — When Does the Interest Period Start?

Section 244A prescribes two different starting dates for the interest period depending on the source of the refund. This is the most important aspect of Section 244A — and the most commonly misunderstood.

Scenario 1 — Refund Due to Excess TDS / TCS / Advance Tax [Section 244A(1)(a)]

Where the refund arises due to excess payment of TDS, TCS, or Advance Tax — the interest period begins from 1st April of the Assessment Year and runs until the date on which the refund is granted.

Start Date: 1st April of the Assessment Year (i.e., beginning of the AY)
End Date: Date on which refund is granted (date of order granting refund, not the date of actual credit)
Example: For AY 2024-25 (FY 2023-24), refund interest under this clause starts from 1st April 2024
Covers: TDS deducted by employer / bank / deductor and reflected in Form 26AS; TCS collected; Advance Tax installments paid under Section 207-209

📌 Why 1st April of AY? TDS and advance tax are paid during the financial year (FY). The government notionally treats these payments as being made on 1st April of the AY — the first day of the year in which the income is assessed. So interest on excess TDS/advance tax runs from 1st April of the AY, not from the actual date of TDS deduction or advance tax payment.

Scenario 2 — Refund Due to Any Other Reason [Section 244A(1)(b)]

Where the refund arises due to any reason other than excess TDS/TCS/advance tax — such as self-assessment tax paid in excess, or tax paid pursuant to an assessment order that is later reduced by an appellate authority — the interest period starts from the actual date of payment of such tax.

Start Date: Date on which the tax (self-assessment tax or demand tax) was actually paid
End Date: Date on which refund is granted
Example: If you paid self-assessment tax of ₹50,000 on 25th July 2024 and later claimed a refund, interest starts from 25th July 2024
Covers: Self-assessment tax paid u/s 140A that turns out to be excess; tax paid under a demand that is later reduced / set aside in appeal; tax paid under Section 143(3) order later reduced by CIT(A) or ITAT

Type of Refund	Clause	Interest Start Date	Interest End Date
Excess TDS deducted (u/s 192, 194, 194A, etc.)	Section 244A(1)(a)	1st April of Assessment Year	Date of grant of refund
Excess TCS collected	Section 244A(1)(a)	1st April of Assessment Year	Date of grant of refund
Excess Advance Tax paid	Section 244A(1)(a)	1st April of Assessment Year	Date of grant of refund
Excess Self-Assessment Tax paid u/s 140A	Section 244A(1)(b)	Date of actual payment	Date of grant of refund
Tax paid under demand — later reduced by appeal / revision	Section 244A(1)(b)	Date of actual payment of demand	Date of grant of refund
Refund on rectification order u/s 154	Section 244A(1)(a) or (b)	Depends on source of original excess payment	Date of grant of refund

How to Calculate Section 244A Interest — With Examples

Example 1 — Refund from Excess TDS (Section 244A(1)(a))

Facts: For AY 2024-25, your total tax liability as per Section 143(1) intimation is ₹80,000. Total TDS deducted during FY 2023-24 (as per Form 26AS) = ₹1,10,000. Refund due = ₹30,000. Refund granted on 15th November 2024.

Refund amount: ₹30,000
10% check: 10% of ₹80,000 = ₹8,000. Refund (₹30,000) > ₹8,000 → Interest applicable ✅
Interest start date: 1st April 2024 (first day of AY 2024-25)
Interest end date: 15th November 2024
Period: April 2024 to November 2024 = 8 months
Interest = ₹30,000 × 0.5% × 8 = ₹1,200
Total refund received: ₹30,000 + ₹1,200 = ₹31,200

✅ Note: The ₹1,200 interest is taxable as "Income from Other Sources" in AY 2025-26 (since received in FY 2024-25). It must be declared in your ITR for AY 2025-26.

Example 2 — Refund from Excess Self-Assessment Tax (Section 244A(1)(b))

Facts: You paid self-assessment tax of ₹60,000 on 28th July 2024 while filing ITR for AY 2024-25. After processing, CPC determined your actual liability at ₹40,000 and issued a refund of ₹20,000. Refund granted on 10th January 2025.

Refund amount: ₹20,000
10% check: 10% of ₹40,000 = ₹4,000. Refund (₹20,000) > ₹4,000 → Interest applicable ✅
Interest start date: 28th July 2024 (date of actual payment of self-assessment tax)
Interest end date: 10th January 2025
Period: July 2024 to January 2025 = 7 months (part of July counted as full month)
Interest = ₹20,000 × 0.5% × 7 = ₹700
Total refund received: ₹20,000 + ₹700 = ₹20,700

Example 3 — Refund After Appeal [Section 244A(1)(b)]

Facts: You paid a demand of ₹2,00,000 under a Section 143(3) assessment order on 5th March 2023. You filed an appeal. CIT(A) reduced the demand to ₹80,000 on 20th August 2024. Refund of ₹1,20,000 granted on 1st December 2024.

Refund amount: ₹1,20,000
Interest start date: 5th March 2023 (date of actual payment of demand)
Interest end date: 1st December 2024
Period: March 2023 to December 2024 = 22 months
Interest = ₹1,20,000 × 0.5% × 22 = ₹13,200
Total refund received: ₹1,20,000 + ₹13,200 = ₹1,33,200

When Is Section 244A Interest NOT Payable?

Section 244A interest is denied or reduced in the following situations:

Refund is less than 10% of assessed tax: If the refund amount does not exceed 10% of the tax determined u/s 143(1) or regular assessment, no interest is payable under Section 244A — irrespective of how long the refund is delayed
Delay attributable to the assessee: Under Section 244A(2), if the delay in processing the refund was caused by the assessee's own actions — e.g., failure to respond to notices, non-submission of required documents, delay in providing bank details for ECS — the period of such delay is excluded from the interest calculation
Return filed belatedly: Where the assessee filed a belated return under Section 139(4) after the due date, the interest period under Section 244A(1)(a) starts from the date of filing the return — not from 1st April of the AY. This is because the delay in processing is partly attributable to the late filing
Refund adjusted against outstanding demand u/s 245: If the refund is adjusted against an outstanding demand under Section 245, Section 244A interest is generally computed up to the date of such adjustment
No refund determined: If the intimation or order does not determine any refund — e.g., tax payable is equal to tax already paid — Section 244A does not apply

⚠️ Belated Return and Interest Impact: If you file your ITR after the due date under Section 139(4), the interest period for the TDS/advance tax portion (Section 244A(1)(a)) starts from the actual date of filing the return — not 1st April of the AY. Filing your ITR on time preserves your full interest entitlement from 1st April of the AY. This is one more reason to always file your return within the due date.

Section 244A(1A) — Additional Interest on Delayed Refund

Section 244A(1A) was inserted to penalise the Department for unreasonable delays in actually paying the refund after the refund order has been passed. If the refund is not paid within 3 months from the end of the month in which the order granting the refund was passed, the assessee is entitled to an additional interest of 3% per annum on the refund amount for the period of delay beyond 3 months.

Parameter	Section 244A(1)(a)/(b)	Section 244A(1A) — Additional Interest
Rate	0.5% per month (6% p.a.)	3% per annum (additional, over and above the regular interest)
Trigger	Delay in processing refund from start date to grant of refund	Refund not actually paid within 3 months of the order granting refund
Period	From start date to date of grant of refund order	From end of 3 months after refund order to date of actual payment
Who Benefits	All taxpayers entitled to refund	Taxpayers whose refund is delayed even after order is passed

📌 Example — Section 244A(1A): Refund order of ₹1,00,000 passed on 15th June 2024. Refund must be paid by 30th September 2024 (3 months from end of June 2024 = end of September 2024). If paid on 15th December 2024 instead — additional Section 244A(1A) interest = ₹1,00,000 × 3% × (2.5 months / 12) ≈ ₹625 (for Oct–Dec period) in addition to regular Section 244A interest.

Taxability of Section 244A Interest

Interest received under Section 244A is taxable income — it is not exempt. It must be declared in your Income Tax Return under the head "Income from Other Sources" (Section 56) in the year in which it is received (since individual taxpayers follow cash basis for this head). The interest amount is shown separately in your Section 143(1) intimation and in Form 26AS / AIS under the tax refund section.

Key Points on Taxability

Year of taxability: The year in which the interest is actually received — not the year to which the refund relates
Head of income: Income from Other Sources — to be declared in Schedule OS of your ITR
No TDS by Department: The Income Tax Department does not deduct TDS on Section 244A interest — the full interest amount is credited to your bank account. You must declare and pay tax on it yourself while filing your ITR
Visible in AIS / Form 26AS: The interest amount is visible in your Form 26AS and Annual Information Statement (AIS). Cross-verify before filing your return
Advance Tax impact: If Section 244A interest is significant, factor it into your advance tax calculation for the year of receipt to avoid Section 234B / 234C interest

🚨 Common Mistake — Not Declaring 244A Interest: Many taxpayers receive refunds that include Section 244A interest but fail to declare it in their next year's ITR. The Department's AIS / Form 26AS records this interest, and if it is not declared, a demand may arise under Section 143(1) — or worse, it may attract penalty under Section 270A for under-reporting of income. Always check your AIS for any Section 244A interest received and declare it in Schedule OS.

How to Check Your Section 244A Interest Amount

Log in to incometax.gov.in with your PAN / Aadhaar and password.
Go to "e-File" → "View Filed Returns" → select the relevant Assessment Year.
The return detail page shows the Refund Status including the refund amount and interest separately — under "Refund Issued" section.
Alternatively, go to "Services" → "Refund Reissue" or the Refund Status page to see the break-up of refund principal and Section 244A interest.
Also check your Form 26AS under Part D — "Details of Paid Refund" — which shows the refund amount and interest amount separately for each Assessment Year.
In your AIS (Annual Information Statement), look under "Tax Information" → "Income Tax Refund" — it shows both the refund principal and interest component.
When you receive the refund in your bank account — check your bank statement. The credit will be from "INCOME TAX REFUND" and the amount includes both principal and interest. The Section 143(1) intimation also shows the interest computation.

What to Do If You Did Not Receive Section 244A Interest

If your refund was paid but no Section 244A interest was included — or the interest is less than what you calculated — here is how to address it:

Step 1 — Verify the 10% Threshold

First check whether your refund exceeds 10% of the assessed tax. If not, no interest is payable under Section 244A and this is correct. If yes, proceed to Step 2.

Step 2 — Check for Delay Exclusion

Check whether the Department has excluded any period on the grounds that the delay was attributable to you — e.g., late filing of return, non-response to notices, delayed bank pre-validation. If the exclusion is wrong, proceed to Step 3.

Step 3 — File a Grievance on the Portal

Go to "Help" → "Submit Grievance" on incometax.gov.in. Select the category as "Refund" and sub-category as "Interest on Refund not received". Provide the Assessment Year, refund amount, date received, and your calculation of interest under Section 244A. The grievance is assigned to the jurisdictional AO for resolution.

Step 4 — File Rectification u/s 154

If the Section 143(1) intimation itself did not include the correct Section 244A interest — or excluded the interest altogether — file a Rectification Request under Section 154 on the portal. Select the type as "Reprocess the Return" and cite the incorrect interest computation as the reason.

Step 5 — Write to Jurisdictional AO

If the grievance and rectification do not resolve the issue, write a formal application to your Jurisdictional Assessing Officer citing Section 244A and requesting computation and payment of correct interest. Attach your calculation, Form 26AS, and the refund credit details from your bank statement.

✅ Important: The right to receive interest under Section 244A is a statutory right — the Department cannot deny it if the conditions are met. Courts have consistently held that interest under Section 244A is not discretionary; it must be paid as a matter of law wherever a refund is due and the prescribed conditions are satisfied.

Section 244A vs Interest Charged on Taxpayer — Key Contrast

Aspect	Interest Charged on Taxpayer	Interest Payable by Department (Section 244A)
Direction	Taxpayer pays to Department	Department pays to Taxpayer
Sections	234A (late filing), 234B (advance tax shortfall), 234C (installment deferral), 220(2) (demand not paid)	Section 244A
Rate	1% per month (234A/B/C and 220(2))	0.5% per month (Section 244A)
Taxability	Not deductible for individuals; deductible for businesses as per provisions	Fully taxable — Income from Other Sources
Automatic?	Yes — computed and added by CPC automatically	Yes — computed and included in refund automatically

Note the asymmetry — the Department charges 1% per month on late tax payments from taxpayers but pays only 0.5% per month on delayed refunds. This is an established feature of the Act. Courts have not interfered with this differential, treating it as a legislative policy decision.

Section 244A — Quick Reference Summary

Particulars	Details
Governing Section	Section 244A, Income Tax Act, 1961
Interest Rate	0.5% per month or part of month (6% p.a.)
Additional Interest	3% p.a. under Section 244A(1A) if refund not paid within 3 months of order
Start Date — TDS/TCS/Advance Tax Refund	1st April of Assessment Year (or date of filing if return is belated)
Start Date — Other Refunds	Date of actual payment of tax
End Date	Date of grant / order of refund
Minimum Threshold	Refund must exceed 10% of assessed tax; otherwise no interest
Delay Exclusion	Period of delay caused by assessee is excluded from interest period (Section 244A(2))
Taxability	Taxable as Income from Other Sources — declare in Schedule OS of ITR
TDS on Interest	No — Department does not deduct TDS on Section 244A interest

Frequently Asked Questions (FAQs)

Q1. What is interest under Section 244A of the Income Tax Act?

Section 244A of the Income Tax Act, 1961 requires the Income Tax Department to pay interest to a taxpayer on any refund of income tax due to them. The interest is at the rate of 0.5% per month (6% per annum) and is the Department's compensation for holding excess tax collected — through TDS, TCS, advance tax, or self-assessment tax — beyond the prescribed period. The interest is calculated automatically by CPC and is included in the refund amount credited to the taxpayer's bank account.

Q2. From when is Section 244A interest calculated on TDS refunds?

For refunds arising from excess TDS, TCS, or advance tax, Section 244A(1)(a) specifies that interest is calculated from 1st April of the Assessment Year — not from the actual date of TDS deduction or advance tax payment. The interest runs from 1st April of the AY until the date the refund is granted. However, if the return was filed belatedly after the due date, the interest period starts from the actual date of filing the return — not 1st April of the AY.

Q3. Is Section 244A interest taxable?

Yes. Interest received under Section 244A is fully taxable as Income from Other Sources under Section 56 of the Income Tax Act. It must be declared in Schedule OS of your Income Tax Return for the year in which the interest is actually received. The Department does not deduct TDS on this interest — the full amount is credited to your bank account. Failure to declare it can result in a demand under Section 143(1) or a penalty under Section 270A for under-reporting of income.

Q4. When is Section 244A interest NOT payable?

Section 244A interest is not payable in the following situations: (1) if the refund amount is less than 10% of the tax assessed under Section 143(1) or regular assessment; (2) if the delay in processing the refund was caused by the assessee's own actions — such as not responding to notices, late filing of return, or delayed bank pre-validation — the period of such delay is excluded from the interest period under Section 244A(2); and (3) if there is no refund determined in the assessment at all.

Q5. What is the rate of interest on income tax refund under Section 244A?

The rate of interest under Section 244A is 0.5% per month or part of a month on the refund amount — which equals 6% per annum. Any part of a month is counted as a full month. Additionally, under Section 244A(1A), if the refund is not actually paid within 3 months from the end of the month in which the refund order was passed, an additional interest at 3% per annum is payable for the period of delay beyond those 3 months.

Q6. Does belated filing of ITR affect the Section 244A interest?

Yes. If you filed your Income Tax Return after the due date as a belated return under Section 139(4), the interest period under Section 244A(1)(a) — for TDS and advance tax refunds — starts from the date of actual filing of the return, not from 1st April of the Assessment Year. This means you lose interest for the period between 1st April of the AY and the date you actually filed the return. Filing on time ensures your full Section 244A interest entitlement is preserved from 1st April of the AY.

Q7. I received a refund but no Section 244A interest was paid. What should I do?

First verify whether your refund exceeds 10% of the assessed tax — if not, no interest is due. If yes, check Form 26AS and AIS for the interest computation. If interest was incorrectly excluded, raise a Grievance on the Income Tax portal under Help → Submit Grievance (category: Refund; sub-category: Interest on Refund not received). Alternatively, file a Rectification Request under Section 154 citing incorrect interest computation. If unresolved, write a formal application to the jurisdictional Assessing Officer citing your statutory right under Section 244A.

📋 Disclaimer: The information provided in this article is intended solely for educational and general informational purposes. It does not constitute legal, financial, or tax advice. Income tax laws, rates, and procedures are subject to change by the Government of India or CBDT. Interest computations depend on specific facts and the exact dates of payment, filing, and processing — which vary case by case. Readers are strongly advised to consult a qualified Chartered Accountant (CA) or tax professional for advice specific to their circumstances. DisyTax shall not be held liable for any loss or damage arising from reliance on the information herein. Always verify current provisions from the official Income Tax portal at www.incometax.gov.in.