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Statutory Provisions

Home Acts & Rules Bill Bills FINANCE BILL, 2016 Chapters List Chapter III DIRECT TAXES This

Clause 90 - Amendment of section 244A. - FINANCE BILL, 2016

FINANCE BILL, 2016
Chapter III
DIRECT TAXES
  • Contents

Amendment of section 244A.

90. In section 244A of the Income-tax Act, with effect from the 1st day of June, 2016,-

(A) in sub-section (1), for clause (a), the following clauses shall be substituted, namely:-

“(a) where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent. for every month or part of a month comprised in the period,-

(i) from the 1st day of April of the assessment year to the date on which the refund is granted, if the return of income has been furnished on or before the due date specified under sub-section (1) of section 139; or

(ii) from the date of furnishing of return of income to the date on which the refund is granted, in a case not covered under sub-clause (i);

(aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one-half per cent. for every month or part of a month comprised in the period, from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted:

Provided that no interest under clause (a) or clause (aa) shall be payable, if the amount of refund is less than ten per cent. of the tax as determined under sub-section (1) of section 143 or on regular assessment;”;

(B) after sub-section (1), the following sub-section shall be inserted, namely:-

“(1A) In a case where a refund arises as a result of giving effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1), an additional interest on such amount of refund calculated at the rate of three per cent. per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted.”;

(C) in sub-section (2), after the words “interest is payable”, the words, brackets, figures and letter “under sub-sections (1) or (1A)” shall be inserted.

 



 

Notes on Clauses:

Clause 90 of the Bill seeks to amend section 244A of the Income-tax Act relating to interest on refunds.

Sub-clause (A) of the said clause seeks to amend clause (a) of sub-section (1) of the said section.

The aforesaid section provides that an assessee is entitled to interest on refund arising out of excess payment of advance tax, tax deducted or collected at source, etc.

Further, it is provided that the period for which the interest is paid on excess payment of tax begins from the 1st April of the assessment year and ends on the date on which refund is granted.

It is proposed to amend the said section to provide that in cases where the return is filed after the due date, the period for grant of interest on refund shall begin from the date of filing of return. 

It is further proposed to provide that an assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever is later, to the date on which the refund is granted.

Sub-clause (B) of the said clause seeks to insert a new subsection (1A) so as to provide that that where a refund arising out of appeal effect is delayed beyond the time prescribed under subsection (5) of section 153, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1) of section 244A, an additional interest on such refund amount calculated at the rate of three per cent. per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted.

Sub-clause (C) of said clause seeks to amend sub-section (2) of the said section so as to give the reference of sub-section (1A) in the said sub-section which is consequential in nature.

These amendments will take effect from 1st June, 2016.

 
 
 
 

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