If ITR is filed on time and the refund is delayed, the government pays interest on it. However, this interest is included in your taxable income and tax has to be paid on it too…
ITR Refund 2025: Every year, as soon as July comes, crores of Indian taxpayers file their Income Tax Return (ITR) that if they have paid more tax, then the government will refund them. But do you know that if there is a delay in getting the refund, then the government also gives you interest on it and that interest is also taxed. If not, then let us tell you everything about this rule
Why do you get interest?
If you have filed ITR before the due date and the tax department took time to return your money, then you get interest at the rate of 0.5% per month on that refund. For example, if you have Rs 1000 and the interest rate is 0.5% per month, then you will get interest of Rs 5 every month. This interest is counted till the refund reaches your bank account. This interest comes under rule section 244A.
However, you also have to pay tax on this interest amount. This interest is included in your taxable income under Income from Other Sources. That is, if you have received interest of Rs 1,000, then you will have to pay tax on that too.
If your refund is less than 10% of the total tax or less than Rs 100, then you will not get any interest. Many times people complain that they only got refund, not interest. This could be the reason. In such a situation, if you have received interest, then it is important to show it correctly in ITR. Put it in Income from Other Sources and if TDS has been deducted, then take credit for it as well.
In how many days does ITR refund come?
If you have filed and e-verified your ITR correctly, the refund is credited to your bank account within 4 to 5 weeks. But in some cases it can happen even faster, if your bank account is already pre-validated, then the refund can also come in 7 to 20 days.
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