Are you waiting for your income tax refund and wondering how long it will take or if you’ll earn interest on it? This guide will help you navigate the process and know what to expect.
How Long Will It Take to Process Your Income Tax Return (ITR)?
After you file your Income Tax Return (ITR), the tax department has up to 9 months from the end of the financial year to process it.
Example: If you filed your ITR for the financial year 2023-24, the department can take until December 31, 2025, to complete the processing.
What If You Miss the Deadline?
If you missed the usual filing deadline of July 31, 2024, don’t worry—you can still submit your ITR until December 31, 2024. However, the processing will still be completed by December 31, 2025.
Will You Get Interest on Your Refund?
Yes! You may receive interest on your refund if it’s more than 10% of your actual tax liability.
Example: If you owe Rs 15,000 in taxes but paid Rs 20,000, you’ll get a Rs 5,000 refund. Since Rs 5,000 is more than 10% of Rs 15,000, you’ll earn interest on this refund.
How Is the Interest Calculated?
- On-Time Filing: If you filed your ITR on time (by July 31), the interest is calculated from April 1 until the refund is paid.
- Belated Filing: If you filed late, interest is calculated from the day you submitted the belated ITR until the refund is paid.
Example for Interest Calculation:
- On-Time Filing: If you filed on July 1, 2024, and received your refund on October 31, 2024, you will get interest for 7 months (from April 2024 to October 2024).
- Belated Filing: If you filed a belated ITR on October 1, 2024, and got your refund on December 31, 2024, you will receive interest for the period from October 1, 2024, to December 31, 2024.
Summary
- Processing Time: Up to 9 months from the end of the financial year.
- Interest on Refunds: Paid if the refund is more than 10% of your tax liability. Calculated from April 1 (or the filing date for belated returns) until the refund is issued.