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Income tax refund delay: Why do some taxpayers not receive interest on late tax refunds?

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By Sangeeta Ojha

3 min read | Updated on November 24, 2025, 08:12 IST

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SUMMARY

Income tax refund delay: The Central Board of Direct Taxes (CBDT) has acknowledged the delays, citing enhanced scrutiny of high-value transactions as a key reason for slower processing this year.

income tax refund delay interest

Although delayed refunds usually carry interest, there are situations where taxpayers may not receive interest. | Image: Shutterstock

Are you still waiting for your income tax refund? You are not alone. Many taxpayers have yet to receive their refunds, even though the September 16 ITR filing deadline passed nearly two months ago. While some have already been paid, many others continue to wait.
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The Central Board of Direct Taxes (CBDT) has acknowledged the delays in tax refunds, citing enhanced scrutiny of high-value transactions as a key reason for slower processing this year. The department has indicated that most pending refunds are expected to be cleared later this month or by December.
Although delayed refunds usually carry interest, there are situations where taxpayers may not receive interest, even if the refund comes late.

Balwant Jain, Mumbai-based tax and investment expert, explained: “Yes, taxpayers do get interest when their refund is delayed, but the interest is not payable for the portion of the delay that is attributable to the taxpayer.”

He added, “The due date for filing ITR is July 31. If returns are filed by that day, and excess TDS or advance tax has been paid, interest on the refund is calculated at 6% per annum from April 1. But if the return is filed after July 31, the interest is counted from the actual date of filing.”

Abhishek Soni, CEO & Co-founder of Tax2win, added: “No, taxpayers do not always get interest on delayed income tax refunds. Whether you get interest depends on a few rules under Section 244A of the Income Tax Act.”

When you may not get interest on delayed refunds

Interest may not be payable in the following situations:

  • Refund amount is very small: In many cases, if the refund is less than 10% of the total tax payable, interest may not apply.

  • Delay attributable to the taxpayer: No interest is payable for delays caused by you, such as:

  • Filing your return late

  • Correcting bank details late

  • Delaying responses to tax notices

  • Refunds arising from appeals or special assessments: Interest calculation may differ, and the full period may not attract interest.

Interest on Refunds: Section 244A explained

Section 244A of the Income Tax Act, 1961 mandates the payment of simple interest by the Income Tax Department to a taxpayer when a refund is due.

Key Provisions:

  • Where a refund becomes due, the taxpayer is entitled to simple interest at 0.5% per month (or part of a month).

  • For advance tax, TDS, or TCS, interest starts from April 1 of the assessment year if the return was filed on time.

  • If the return is filed after the due date, interest starts from the actual date of filing.

  • Refunds arising from appellate orders attract an additional 3% per annum for a specified period.

  • If the refund is delayed due to the taxpayer or deductor, the period attributable to them is excluded from interest calculation.

CBDT’s move to speed up refunds

In a landmark step to accelerate tax refunds, the CBDT issued Notification No. 155/2025 (October 27, 2025), empowering the Commissioner of Income Tax (CPC) Bengaluru to directly correct computational mistakes, including errors in prepaid tax credits and interest under Section 244A.
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About The Author

sangeeta-ojha.webp
Sangeeta Ojha is a business and finance journalist with vast experience across leading media platforms, including Mint and India Today. Passionate about personal finance, she has built a reputation for covering a wide range of PF topics—from income tax and mutual funds to insurance, savings, and investing.

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