Section 243 of ITA, 1961 : Section 243: Interest On Delayed Refunds

Explanation using Example

Imagine a taxpayer, Mr. Sharma, has filed his income tax return claiming a refund due to excess tax paid. His total income includes salary, capital gains, and interest from bank deposits. The assessment is completed on June 30th, and it is determined that he is indeed eligible for a refund.

According to Section 243(1)(a) of The Income-tax Act, 1961, if the Assessing Officer does not grant Mr. Sharma's refund within three months from the end of July (which is the end of the month following the completion of the assessment), the Central Government is liable to pay him interest at 15% per annum on the refund amount.

However, if the delay in processing the refund is due to Mr. Sharma's actions, such as not providing necessary documents on time, the period of delay caused by him will not be counted for the interest payment as per the Explanation provided in the Act.

If there is any dispute over the period to be excluded for interest calculation, the decision made by the relevant tax authority, as mentioned in Section 243(2), will be final and binding.

Lastly, it is important to note that Section 243(3) clarifies that these provisions do not apply for assessments from the year commencing April 1, 1989, onwards.