Interest on Income Tax Refund: Why You May Not Get Interest on Delayed Refund?

While many taxpayers have received their income tax refund immediately after filing their Income Tax Return (ITR), many are still waiting for their Refund, even though they have filed their return earlier. But what exactly is causing this delay?

The Chairman of the Central Board of Direct Taxes (CBDT) has informed that this year, the income tax department is doing some extra checks of large-value transactions, and that is why it is taking time to process the refund. However, the pending refunds are likely to be released by December 2025, as per the CBDT.

Additionally, to speed up the refund processing, the CBDT has issued a Notification No. 155/2025, dated October 27, 2025, giving authority to the commissioner of Income Tax (CPC), Bengal, to correct any computational errors, such as mistakes in prepaid tax credit and interest under section 244A.

Reasons for Not Receiving Interest on Delayed Refunds

The taxpayers often get their delayed refund with interest. But there can still be some situations where you may not receive the interest on the delayed refund. Experts say that whether you get the interest or not depends on the timely submission of the ITR. In short, if the ITRs are filed within the specified due date announced by the CBDT, and you have paid any excess TDS or advance payment, you will get the refund along with the interest at 6% per annum from April 1. But if the return is filed after the due date, the interest is calculated from the actual date of filing. Here are some other reasons why you may not get the interest on the delayed refund:

• If ITR is not filed on time
• If the refund results from an appeal, reassessment, or special assessment, interest calculation could be different, and you might not receive interest for the entire duration of the delay.
• You have submitted incorrect bank details
• Tax notices are not responded on time.
• If the amount of refund is very small, i.e., less than 10% of the total tax payable.

Other Reason Under Section 244A

Other experts say that the interest depends on certain provisions under section 244A of the Income Tax Act. Section 244A mandates the payment of simple interest to the taxpayer on any amount of income tax refund that is due to them. Here are some provisions related to this section:

• The taxpayer receives simple interest at 0.5% per month (or part of a month) for the due refund.
• The calculation for interest starts from April 1 of the assessment year for the advance tax, TDS, or TCS, if the income tax return is filed on time.
• If the return is filed after the due date, interest starts from the actual date of filing.
• If the delay in refund is caused by the taxpayer or the deductor, that delay period is excluded from the interest calculation.
• Refunds resulting from appellate orders attract an extra interest of 3% per annum for a specified period.