Interest on refund due to deductor at the rate of one-half per cent for every month or part of a month. Sub-section (1B) inserted in Section 244A

Interest on refund due to deductor at the rate of one-half per cent for every month or part of a month. Sub-section (1B) inserted in Section 244A

Budget 2017-18 Interest on refund due to deductor

The existing section 244A of the Act provides that an assessee is entitled to receive interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, etc.

It is proposed to insert a new sub-section (1B) in the said section to provide that where refund of any amount becomes due to the deductor, such person shall be entitled to receive, in addition to the refund, simple interest on such refund, calculated at the rate of one-half per cent. for every month or part of a month comprised in the period, from the date on which claim for refund is made in the prescribed form or in case of an order passed in appeal, from the date on which the tax is paid, to the date on which refund is granted.

It is also proposed to provide that the interest shall not be allowed for the period for which the delay in the proceedings resulting in the refund is attributable to the deductor. This amendment will take effect from 1st April, 2017.