Income Tax Return: Those filing ITR for the financial year 2024-25 on September 15, 2025 can get 33.33 per cent more interest on their refund, as the Income Tax Department pays 0.5 per cent monthly interest on refunds.
Income Tax Return: The Income Tax Department has extended the last date for filing income tax returns from July 31, 2025 to September 15, 2025. This will provide relief to the common people, but the government may have to suffer losses. In fact, due to the extension of the deadline, those claiming refund may have to pay more interest, which includes both Indian and NRI taxpayers.
Taxpayers’ income will increase
Under section 244A of the Income Tax Act, the Income Tax Department has to pay interest of 0.5 percent. That is, the more delayed the refund is, the more interest will have to be paid. However, it is also important to keep in mind that this interest received on tax refund will come under the purview of tax as income from other sources in the relevant year. However, many taxpayers will not have any problem with this increased income because this income is still tax free for them because in the financial year 2025-26 (FY 2026-27), non-salaried and salaried individuals can avail the benefit of income up to Rs 12 lakh and Rs 12.75 lakh respectively being completely tax free due to increase in tax exemption under section 87A.
This much interest will have to be paid
Suppose a taxpayer files ITR by July 15 before the previous deadline of July 31, 2025 and he has to get a refund of Rs 25000. If the refund is processed by July 31, he will get Rs 500 as interest.
However, now if he files ITR by September 15, 2025 after the deadline is extended and the refund is processed on September 31, then he will get Rs 750 as interest on the refund amount of Rs 25,000, which is 33 percent more than Rs 500. However, the interest received on the refund will also be considered as your income and you will also have to pay tax on it under income from other sources.
Overall, interest under section 244A will have to be paid on the refund amount from April 1, 2025. Even if the ITR is filed after July 31, 2025, but within September 15, 2025.
