Here we list out 5 income tax rules in regard to ITR refund that you should know:
1] Eligibility: Taxpayers filing ITR within or after the due date are eligible for ITR refund.
2] Interest on ITR refund: If a taxpayer has filed ITR within the given due date of 31st July 2022, he or she will get interest on one's ITR refund from 1st April 2022.
3] Interest rate on ITR refund: A taxpayer filing ITR within the given due date is eligible for monthly interest of 0.50 per cent on one's ITR refund amount.
4] Taxation rules on ITR refund: ITR refund amount is an income that taxpayer has already reported in the concerned financial year. So, ITR refund amount is non-taxable. However, interest earned on the ITR refund amount is taxable as per the income tax slab applicable on the taxpayer after adding the interest amount with net annual income of the individual.
5] Interest calculation on ITR refund: While calculating interest on ITR refund, any fraction of month would be treated as one month whereas any fraction of one hundred rupees shall be ignored. For example, If we want to compute interest on ₹8,489 for 3 months and 10 days, then while computing the amount liable to interest, any fraction of ₹100 is to be ignored and, hence, we will ignore ₹89 from ₹8,489 and the balance amount will come to ₹8,400, thus interest under section 234D will be computed on ₹8,400. Further, the period of 10 days will be considered as full month and, hence, interest will be computed for 4 months.
