Issues in time period for refund interest

CA V.K. Subramani

Taxpayers admit income and pay tax which is an annual compliance prescribed in law. There are cases where the taxpayer files ITR only for the purpose of refund of TDS/TCS. The tax may be because of TDS, TCS or advance tax or self-assessment tax. Section 244A deals with interest on refund. Previously, section 244 dealt with interest on refund where no claim is needed and this section ceased to be applicable from assessment year 1989-90 onwards and section 244A inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01.04.1989 has been operational since then.

The Finance Act, 2023 w.e.f. 01.10.2023 inserted a proviso to section 244A(1) whereby if a refund arises as a result of an order passed by the Assessing Officer in consequence of an application made by the assessee under section 155(20), such interest shall be paid for the period from the date of such application to the date on which such refund is granted.