By BillCut
Last updated: 2 November 2026
Income tax refund interest section 244A is the rule on the interest the Income Tax Department may pay you when it grants a refund. As reproduced on the Department’s section 244A page, the Income-tax Act, 1961 sets simple interest at 1% per month or part of a month. This post explains how that works, based on that page, checked on 2 November 2026.
What is section 244A?
Section 244A sits in the chapter on refunds in the Income-tax Act, 1961. It says when interest is payable on a refund, how it is counted and when it is not payable.
What is the rate of interest on a refund?
The page states simple interest at 1% per month or part of a month. Simple interest means interest is not charged on earlier interest. A part month counts as a full month.
From when does the interest run?
The page splits the rule into two cases.
| Case | Interest runs from | Interest runs to |
|---|---|---|
| Refund of tax collected at source, advance tax, or tax treated as paid under section 199 | 1 April of the assessment year | Date the refund is granted |
| All other cases | Date of payment of the tax or penalty | Date the refund is granted |
For the second case, the page explains the date of payment as the date the amount paid goes beyond the demand in a notice under section 156.
When is no interest payable?
- For the first case in the table, no interest is payable if the refund is less than ten per cent of the tax determined on the return processed under section 143(1) or on regular assessment.
- If the delay is due to you, wholly or partly, that period is left out of the interest period. The Chief Commissioner or Commissioner decides disputes about that period, and the page says the decision is final.
What if an order changes the refund later?
If a later order, such as one under section 143(3), 147, 154, 250 or 263, raises or cuts the amount on which interest was payable, the interest is adjusted. If it falls, the Assessing Officer serves a demand notice for the excess interest paid.
How can you work out the arithmetic?
Illustrative example: suppose a refund of Rs 10,000 is granted and the interest period is three months or part months, with no exclusions. At 1% per month, simple interest would be 1% of Rs 10,000 for each month, so Rs 100 a month and Rs 300 in total. This only shows the sum. Your real figure depends on your facts, the dates and the Department’s computation.
Does the Income-tax Act, 2025 change this?
The e-Filing portal home page notes that dues for FY 2025-26 fall under the earlier law and Tax Year 2026-27 onward under the Income-tax Act, 2025. This post covers only the 1961 text on the Department’s page. We have not confirmed the matching provision of the 2025 Act, so check the Department’s site for your year.
What is the difference between interest and the refund itself?
The refund is the extra tax you paid or had deducted. Interest is a separate amount that the rule above may add on top. The two can be treated differently in your intimation, so read both lines. If you only see the refund and expected interest, compare the dates against the table above before you raise a query.
What records should you keep?
Keep your filed return, the intimation from the Department, and the date your refund was credited. With these three, you can check the interest period yourself. If the interest looks different from what you expected, a qualified tax professional can review the computation with you.
Why does refund interest matter to you?
A refund can arrive months after you file. Interest, where it applies, is the Department’s way of accounting for that wait. Knowing the rule helps you read your intimation and spot whether interest has been included. If a figure looks wrong, you can compare it with the rule above or ask a qualified tax professional. You can also use the portal’s helplines for processing and refund queries.
What if your refund failed or is stuck?
If a refund fails, the portal has a refund reissue facility. The portal’s refund reissue help page lists the steps, and the Department’s refund reissue page says refunds go only to a pre-validated bank account. Neither page states a timeline. For the filing side, read how to file income tax online in India. For recent policy changes, see what is changing in India tax and fintech. For deductions planning, see tax saving options under 80C.
Should you plan your debt around a refund?
Refund interest is not something to count on when you plan EMIs. Whether it is paid, and how much, depends on the rules above. If high interest dues are weighing on you, it helps to look at options early.
Check your options with BillCut
How BillCut can help
BillCut is a balance transfer and debt reduction platform. It works with lending partners to help eligible borrowers move high interest dues, such as credit card balances and personal loan EMIs, into one structured EMI. BillCut earns from helping borrowers refinance, so it has an interest in this option. Approval and terms depend on the partner lender.
Frequently asked questions
What is section 244A?
It is the provision in the Income-tax Act, 1961 that deals with interest on refunds, including the rate, the period and when no interest is payable.
What rate of interest applies to a refund?
The Department’s page states simple interest at 1% per month or part of a month.
Is a part month counted?
Yes. The page says interest is at 1% per month or part of a month, so a part month counts as a month.
From which date does the interest start?
For tax collected at source, advance tax or tax treated as paid under section 199, from 1 April of the assessment year. In other cases, from the date of payment of the tax or penalty. Both run to the date the refund is granted.
Is interest always paid?
No. For the first case, no interest is payable if the refund is less than ten per cent of the tax determined. Delay due to the taxpayer is also left out of the interest period.
Does the Income-tax Act, 2025 change this?
This post covers only the 1961 text. We have not confirmed the matching 2025 provision, so check the Department’s site for your tax year.
Does BillCut handle tax refunds?
No. BillCut is a balance transfer and debt reduction platform. It does not file returns or handle refunds.
Disclaimer: This post is for general information only. It is not tax, legal or financial advice. Tax law changes, so confirm the position for your year on the official Income Tax Department site or with a qualified tax professional.
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