ITR Refund Rules: After filing ITR, now there is a wait for a refund, know - when will the money be returned to the account.
ITR Refund Rules: The last date for filing Income Tax Return (ITR) for the financial year 2021-22 and assessment year 2022-23 is over. Those who have filed their I-T return on or before 31st July 2022 have either got their ITR refund or are waiting for their ITR refund.
A Mumbai-based tax and investment expert said, “If a taxpayer fails to file ITR within the due date given for filing ITR, he can file ITR by paying a penalty. Those who file ITR after 31st July 2022 will not get interested in ITR refunds from 1st April 2022.
Balwant Jain further said that a taxpayer's ITR refund is not an income but interest earned on an ITR refund is one's income and one has to add this interest to his annual income while filing Income Tax Return for AY2023-24.
On how interest is calculated on ITR refund, SEBI registered tax and investment expert Jitendra Solanki said, “The interest on ITR refund is calculated at a monthly interest rate of 0.50 percent month-on-month. Also, there is a provision for section 234D of the Income Tax Act. Recovery of interest on excess refund given to the taxpayer." He said that any fraction of a month would be treated as a full month and interest would be calculated as such.
Five rules regarding ITR refund
-Taxpayers filing ITR on or after the last date are eligible for an ITR refund.
-If a taxpayer has filed ITR within the due date of 31st July 2022, then he will get interested in an ITR refund with effect from 1st April 2022.
-Taxpayers filing ITR within the last date are eligible for 0.50 percent monthly interest on their ITR refund amount.
-ITR refund amount is an income that the taxpayer has already reported in the respective financial year. Hence, the ITR refund amount is non-taxable. The interest earned on the ITR refund amount is taxable as per the income tax slab applicable to the taxpayer after adding the interest amount with the net annual income of the individual.
-While computing interest on an ITR refund, any fraction of a month will be treated as one month, while any fraction of Rs.100 will be ignored. For example, if we want to calculate the interest on Rs.8,489 for 3 months and 10 days, then while computing the amount liable to interest, any fraction of Rs.100 should be ignored, and hence, we can calculate the amount from Rs.8,489 to Rs. 89 and the balance amount will come to Rs.8,400. Thus the interest under section 234D will be calculated at Rs.8,400. Further, a period of 10 days will be treated as a complete month and hence, interest will be calculated for 4 months.