Taxman should pay for refund delays, rules CBDT
A taxpayer should not be denied interest on refunds unless the delay is
caused by the assessee's fault, says a recent directive from the Central
Board of Direct Taxes.
A taxpayer should not be denied interest on refunds unless the delay is caused by the assessee's fault, says a recent directive from the Central Board of Direct Taxes.
The directive was triggered by an observation made by the Delhi High Court on 14 March 2013. According to the court, when the delay is not attributable to the assessee, but to the revenue department, the interest should be paid under Section 244A of the Income-Tax Act.
Even in cases where the taxpayer is 'rightly' denied interest on refund, the assessing officer has to provide a written explanation for the denial.
Under Section 244A of the Income-Tax Act, a taxpayer is entitled to interest at 0.5% for every month (6% per annum) from the first day of April of the assessment year to the date on which the refund is granted, where the refund arises on account of tax deduction at source (TDS) or advance-tax payment. However, no interest is paid if the refund amount is less than 10% of the tax paid.
The directive was triggered by an observation made by the Delhi High Court on 14 March 2013. According to the court, when the delay is not attributable to the assessee, but to the revenue department, the interest should be paid under Section 244A of the Income-Tax Act.
Even in cases where the taxpayer is 'rightly' denied interest on refund, the assessing officer has to provide a written explanation for the denial.
Under Section 244A of the Income-Tax Act, a taxpayer is entitled to interest at 0.5% for every month (6% per annum) from the first day of April of the assessment year to the date on which the refund is granted, where the refund arises on account of tax deduction at source (TDS) or advance-tax payment. However, no interest is paid if the refund amount is less than 10% of the tax paid.
