Income Tax Refund Delay? Know How You Can Earn 6% Annual Interest from the Government

Income Tax Refund Delay: Every year, millions of people in India file their Income Tax Returns (ITR) to report their income and pay taxes. After filing, if a taxpayer has paid more tax than required, the Income Tax Department issues a refund. However, sometimes the refund process gets delayed. What many people don’t know is that — if your income tax refund is delayed, you can actually earn interest on it from the government! Yes, that’s right. The government pays up to 6% annual interest on delayed refunds.

What is an Income Tax Refund?

An income tax refund happens when you have paid more tax than what you actually owe for the year. This can happen due to:

• Excess TDS (Tax Deducted at Source) by your employer or bank.
• You paid advance tax or self-assessment tax higher than needed.
• You made eligible investments or deductions that reduced your taxable income.

When you file your ITR, the Income Tax Department checks your income, deductions, and taxes paid. If the amount paid is more than your actual tax liability, the extra money is refunded to you.

Why Do Refunds Get Delayed?

Usually, refunds are processed within a few weeks after filing the return, especially when the ITR is e-verified quickly. But sometimes, there can be delays due to reasons such as:

1. Incorrect bank details – Wrong account number or IFSC code in the ITR.
2. Mismatch in data – Errors in income, TDS, or deduction details.
3. Manual verification – When the department needs to recheck some claims.
4. Late processing by CPC – The Centralized Processing Center (CPC) may take longer to review your return.

When such delays occur, the government compensates taxpayers by giving interest on the delayed refund.

How Much Interest Can You Get on Delayed Refunds?

According to Section 244A of the Income Tax Act, if your refund is delayed, the government must pay you interest on that amount.

Here’s how it works:

• The interest rate is 6% per year (simple interest).
• The interest is calculated from April 1 of the assessment year until the date the refund is actually paid.
• The interest amount is also taxable — it is added to your income under “Income from Other Sources.”

Let’s take an example.

Example: How Interest is Calculated

Suppose you filed your ITR for the financial year 2023-24 (Assessment Year 2024-25).
You are eligible for a refund of ₹10,000, but you receive it on October 1, 2025 — a delay of 6 months after April 1, 2025.

Here’s the calculation:

• Refund amount: ₹10,000
• Interest rate: 6% per year
• Delay: 6 months

Interest = ₹10,000 × 6% × (6/12) = ₹300

PM Kisan Yojana: Know How to Get the Next Installment Benefit Good News for Farmers

So, you will receive ₹10,300 (₹10,000 refund + ₹300 interest).

This shows how even a small delay can earn you some extra money.

When is Interest Not Paid?

You will not get interest if:

1. The refund amount is less than 10% of your total tax paid.
2. You have not e-verified your return on time.
3. You have filed your ITR after the due date (late filing).
4. The refund is issued within three months of filing your return or completing verification.

So, it’s important to file your ITR on time and verify it early to make sure you are eligible for interest in case of delay.

How to Check the Status of Your Refund

You can easily check the status of your refund online using these steps:

Atal Pension Yojana: The Most Trusted Government Scheme for Senior Citizens

1. Visit the official Income Tax e-filing portal – https://www.incometax.gov.in
2. Log in using your PAN and password.
3. Go to ‘View Filed Returns’ section.
4. Click on your latest ITR and check the refund status.

Alternatively, you can check on the TIN NSDL website (now integrated with the e-filing portal).

If it says “Refund Issued,” check your bank account.
If it says “Refund Failure,” correct your bank details and revalidate your return

How to Ensure You Get Interest Properly

To make sure you receive the correct interest on your refund:

• File your ITR before the due date.
• E-verify your ITR quickly — ideally within 24–48 hours.
• Double-check your bank details in the refund section.
• Keep your records ready in case the department asks for clarification.

If you think the interest amount credited is less than what you deserve, you can raise a grievance online on the e-filing portal under “Grievances → Refund Related.”

Final Thoughts

Getting a refund from the government feels great — it means you’ve paid your taxes honestly and even get your excess amount back. But if your refund is delayed, don’t worry! The law is on your side.

Thanks to Section 244A, the Income Tax Department pays 6% interest per year for delays, ensuring that taxpayers are not at a loss. Just make sure your return is accurate, filed on time, and verified early.

• Credit Card Loan Trap: This Common Credit Card Mistake Can Ruin Your Financial Health

Latest Updates

Atal Pension Yojana: The Most Trusted Government Scheme for Senior Citizens

Sukanya Samriddhi Yojana: A Safe Saving Plan for Your Daughter’s Bright Future

Credit Card Loan Trap: This Common Credit Card Mistake Can Ruin Your Financial Health

EPFO UAN: UAN Number is Not Activated? Don’t Panic See the Simple Process Here

Sell Your old ₹100 Rupee Note for 6 Lakhs! Authentic Ways to Cash In