Section 244 of Income Tax Act "Interest on refund where no claim is needed"
244. (1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Assessing Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at fifteen per cent per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted.
(1A) Where the whole or any part of the refund referred
to in sub-section (1) is due to the assessee, as a result of
any amount having been paid by him after the 31st day of
March, 1975, in pursuance of any order of assessment or
penalty and such amount or any part thereof having been
found in appeal or other proceeding under this Act to be in
excess of the amount which such assessee is liable to pay as
tax or penalty, as the case may be, under this Act, the
Central Government shall pay to such assessee simple
interest at the rate specified in sub-section (1) on the
amount so found to be in excess from the date on which such
amount was paid to the date on which the refund is granted :
Provided that where the amount so found to be in excess was
paid in instalments, such interest shall be payable on the
amount of each such instalment or any part of such
instalment, which was in excess, from the date on which such
instalment was paid to the date on which the refund is
granted :
Provided further that no interest under this sub-section
shall be payable for a period of one month from the date of
the passing of the order in appeal or other proceeding :
Provided also that where any interest is payable to an
assessee under this sub-section, no interest under
sub-section (1) shall be payable to him in respect of the
amount so found to be in excess.
(2) Where a refund is withheld under the provisions of
section 241, the Central Government shall pay interest at
the aforesaid rate on the amount of refund ultimately
determined to be due as a result of the appeal or further
proceeding for the period commencing after the expiry of
three months from the end of the month in which the order
referred to in section 241 is passed to the date the refund
is granted.
(3) The provisions of this section shall not apply in
respect of any assessment for the assessment year commencing
on the 1st day of April, 1989, or any subsequent assessment
years.
244A. (1) Where refund of any amount becomes due to the
assessee under this Act, he shall, subject to the provisions
of this section, be entitled to receive, in addition to the
said amount, simple interest thereon calculated in the
following manner, namely :-
(a) where the refund is out of any tax collected at source
under section 206C or paid by way of advance tax or treated
as paid under section 199, during the financial year
immediately preceding the assessment year, such interest
shall be calculated at the rate of one-half per cent for
every month or part of a month comprised in the period,-
(i) from the 1st day of April of the assessment year to the
date on which the refund is granted, if the return of income
has been furnished on or before the due date specified under
sub-section (1) of section 139; or
(ii) from the date of furnishing of return of income to the
date on which the refund is granted, in a case not covered
under sub-clause (i);
(aa) where the refund is out of any tax paid under section
140A, such interest shall be calculated at the rate of
one-half per cent for every month or part of a month
comprised in the period, 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:
Provided that no interest under clause (a) or clause (aa)
shall be payable, if the amount of refund is less than ten
per cent of the tax as determined under sub-section (1) of
section 143 or on regular assessment;
(b) in any other case, such interest shall be calculated
at the rate of one-half per cent for every month or part of
a month comprised in the period or periods from the date or,
as the case may be, dates of payment of the tax or penalty
to the date on which the refund is granted.
Explanation.-For the purposes of this clause, "date of
payment of tax or penalty" means the date on and from which
the amount of tax or penalty specified in the notice of
demand issued under section 156 is paid in excess of such
demand.
(1A) In a case where a refund arises as a result of giving
effect to an order under section 250 or section 254 or
section 260 or section 262 or section 263 or section 264,
wholly or partly, otherwise than by making a fresh
assessment or reassessment, the assessee shall be entitled
to receive, in addition to the interest payable under
sub-section (1), an additional interest on such amount of
refund calculated at the rate of three per cent per annum,
for the period beginning from the date following the date of
expiry of the time allowed under sub-section (5) of section
153 to the date on which the refund is granted.
(1B) Where refund of any amount becomes due to the deductor
in respect of any amount paid to the credit of the Central
Government under Chapter XVII-B, such deductor shall be
entitled to receive, in addition to the said amount, simple
interest thereon 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-
(a) claim for refund is made in the prescribed form; or
(b) tax is paid, where refund arises on account of giving
effect to an order under section 250 or section 254 or
section 260 or section 262,
to the date on which the refund is granted.
(2) If the proceedings resulting in the refund are delayed
for reasons attributable to the assessee or the deductor, as
the case may be, whether wholly or in part, the period of
the delay so attributable to him shall be excluded from the
period for which interest is payable under sub-section (1)
or (1A) or (1B), and where any question arises as to the
period to be excluded, it shall be decided by the Principal
Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner whose decision thereon shall be
final.
(3) Where, as a result of an order under sub-section (3) of
section 115WE or section 115WF or section 115WG or
sub-section (3) of section 143 or section 144 or section 147
or section 154 or section 155 or section 250 or section 254
or section 260 or section 262 or section 263 or section 264
or an order of the Settlement Commission under sub-section
(4) of section 245D, the amount on which interest was
payable under sub-section (1) has been increased or reduced,
as the case may be, the interest shall be increased or
reduced accordingly, and in a case where the interest is
reduced, the Assessing Officer shall serve on the assessee a
notice of demand in the prescribed form specifying the
amount of the excess interest paid and requiring him to pay
such amount; and such notice of demand shall be deemed to be
a notice under section 156 and the provisions of this Act
shall apply accordingly.
(4) The provisions of this section shall apply in respect of
assessments for the assessment year commencing on the 1st
day of April, 1989, and subsequent assessment years :
Provided that in respect of assessment of fringe benefits,
the provisions of this sub-section shall have effect as if
for the figures "1989", the figures "2006" had been
substituted.