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Interest on tax refund

sharad mohan (senior management) (36 Points)

18 December 2015

The Income Tax authorities had taken away money out of my bank accounts as also took over my monthly salary, by making best judgement assessments. Post my appeals, all the matters were decided in my favour. Now they have refunded my money with only 6% interest and that too, after a lot of pursuing/complaints/grievances/letters/visits (almost 10 months after the judgements in my favour).

My queries:

1. Can I claim more interest since I have actually incurred (with proof) an interest of 18% on my house dues.

2. Can I claim interest for the delay of 10 months in releasing my refunds.

Thanks,

Sharad Mohan

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6 Replies

Ruchi (CA) (1410 Points)
Replied 18 December 2015

Dear Sir,

You cannot claim a higher rate of interest from the dept as 6%p.a. is the defined rate of interest which the dept is required to pay, no matter even if you have suffered a personal loss of 18 % on that amount.

The rate of interest is calculated from the date of payment of tax to the date of signing of refund order. If the interest paid to you is of the lesser period of time than this, then you can claim for the balance period from the dept.

Regards

S. Shiroor (Others) (1207 Points)
Replied 18 December 2015

1) you cannot claim interest than 0.5% per month

2) You can claim interest for delay of AO and no fault of assesse. Intruction No 7/2013 of CBDT dated 15th July 2013 which is based on Delhi High court Judgement clearly talks of Payment of interest for no fault of assesse.

The Instruction is attached herewith for your benefit. You can apply to your AO with xerox copy of this instructions. I hope this helps.

Attached File : 1476782 20151218143131 cbdt instruction interest 244a refunds.pdf downloaded: 110 times

S. Shiroor (Others) (1207 Points)
Replied 18 December 2015

ALL REFUND SEEKERS SHOULD CLAIM FOR INTEREST U/S 244 WHERE TDS IS NOT VISIBLE AT THE TIME OF ASSESMENT AND SUBSEQUENTLY THE TDS IS RECTIFIED. AND REFUND IS ISSUED AFTER RECTIFICATION.

High Court Judgement and Instruction no 7 is clear. Please comment - Experts.

Even my case forAY 2008-09 and 2009-10 is pending.

sharad mohan (senior management) (36 Points)
Replied 18 December 2015

Thanks for the reply. Now, can you help me interpreting the exact clause in the IT Act - Section 244A, which talks of 2 different rates >>> 0.5% as also 1%. In that context, wont my refund classify under the 1% aspect?

Thanks... Sharad

S. Shiroor (Others) (1207 Points)
Replied 18 December 2015

Can you please tell me what was the amt of Tax paid and the amt of refund and the assesment Year. Experts in Accoubts and tax laws please help hm out.

I am a Bridge Engineer Designing Bridges.