Query Regarding Adjustment of Income Tax Refund Against Interest Liability

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This query is : Resolved

Suresh S. Tejwani (Querist)
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09 August 2026 If the tax demand has been fully paid, but the interest amount was not paid, can the refund arising in the subsequent financial year be adjusted against the outstanding interest liability, or will the refund be credited to the taxpayer's bank account?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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09 August 2026 Under Section 245 of the Income Tax Act, a subsequent year's refund can be adjusted against an outstanding interest liability, provided the Income Tax Department issues a prior intimation and follows due process giving the taxpayer an opportunity to respond.

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