Income-tax Act, 2025

Interest on refunds - Section 437

Interest on refunds.

437. (1) Where a refund is due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the refund, simple interest thereon calculated at the rate of 0.5% for every month or part of a month, in the circumstances specified in column B of the Table below, for the period specified in column C of the said Table.

TABLE

Sl. No.

Circumstances

Period

A

B

C

1.

Where the refund is out of tax collected at source under section 394 or paid by way of advance tax or treated as paid under section 390(5), during the financial year.

(a) From the first day of April of the year following the tax year to the date on which the refund is granted, where the return of income has been furnished on or before the due date as specified in section 263(1);

(b) from the date of furnishing the return of income to the date on which the refund is granted; in any other case.

2.

Where the refund is out of any tax paid under section 266.

From the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted.

3.

Any other case.

From the date or, as the case may be, dates on and from which the amount of tax or penalty specified in the notice of demand issued under section 289 is paid in excess of such demand to the date on which the refund is granted.

(2) No interest shall be payable under sub-section (1) (Table: Sl. No. 1 or 2), if the amount of refund is less than 10% of the tax as determined under section 270(1) or on regular assessment.

(3) Where refund, mentioned in sub-section (1) (Table: Sl. No. 1), arises as a result of an order passed by the Assessing Officer in consequence of an application made by the assessee under section 288(1) (Table: Sl. No. 11), interest shall be calc .... To read the full section download the app from Google Play store