Income Tax Refund Delay: Interest You Can Claim

Income-Tax Refunds Stuck for Months? Here’s How Much Interest You Could Be Owed

If you’re still waiting for your income-tax refund—even after filing your return and getting the “refund due” message—you’re not alone.

Many taxpayers are facing delays, and the good news is: under Section 244A of the Income‑tax Act, 1961 you may be eligible for interest on the delayed refund.

Why Are Refunds Getting Delayed?

Some of the common reasons refunds are stuck:

• Mismatch between your ITR data and Form 26AS / AIS / TDS records

• Bank account details not validated or PAN-Aadhaar linkage incomplete.
• Returns under scrutiny, high-value transactions flagged, or incomplete verification.
• Filing return late → interest may start later or you lose some benefit.

How Much Interest Can You Get?

Here are the facts:

• Under Section 244A you are entitled to simple interest at the rate of 0.5% per month (i.e., about 6% per annum) on the refund amount if the delay is due to the tax department (and you have complied).

• Interest starts from 1 April of the assessment year if you filed your return on time. If you file late, interest starts only from the date of filing.
• If the refund is less than 10% of your total tax payable, interest may not apply.
• The interest is calculated for delays caused by the department, not delays caused by you (late filing, incorrect details, non-verification).

Example: Suppose you are owed a refund of ₹100,000 and the tax department delays for 4 months beyond the due date and the delay is entirely their fault → Interest = ₹100,000 × 0.5% × 4 = ₹2,000.

What You Should Do Right Now

   Check Key Details:

• Make sure your PAN is linked to Aadhaar, bank account is pre-validated in the e-Filing portal and your ITR return is processed completely.

• In the “My Account” section of the e-filing portal check for refund status.

• Reconcile your Form 26AS, AIS, TDS entries with your return. Fix any mismatches ASAP.

   If Refund is Delayed and You Believe You Are Eligible for Interest:

• Note the date when refund was due.

• If the return was filed on time, compute interest at 0.5% per month for the period of delay caused by the department.

• If you filed late, interest starts only from filing date.

• If interest is missing, you can raise a request/rectification under Section 154 or file grievance via the e-Nivaran portal.

Why This Matters to You

• Cash flow impact: Your refund delays mean your money is locked up — interest is a small compensation but still your money.

• Planning: If you count on that refund for investment, loan repayment or major expense — delays disrupt your plan.

• Your rights: Knowing you may get interest means you’re not powerless. The law protects you.

Final Thoughts & Next Step

If your refund is pending beyond the usual time, don’t just wait — act. Check your eligibility for interest under Section 244A, correct any issues from your side, and follow up on the processor. Whether you’re owed ₹500 or ₹50,000 — knowing the rules puts you in control.

If you’ve been waiting for your refund for more than 2-3 months, open your e-Filing dashboard right now, check your refund status, verify your details and estimate the interest you might claim. If you need help, consult a tax advisor today — the sooner you act, the better.