HomeUtilitiesThe Income Tax Refund Rules You Should Know

The Income Tax Refund Rules You Should Know

A taxpayer who is receiving an ITR return is exempt from tax. However, the principal amount is not taxable. Interest on ITR returns would be considered income for FY23. This means that it must be included in the taxpayer’s annual net income.

When filing ITR for IY2023-24.

Here are 5 income tax rules regarding ITR refunds that you need to know:

1] Eligibility: ITR refunds are possible for taxpayers who have filed ITR by the due date or earlier.

2] Interest on ITR reimbursement: A taxpayer who has filed ITR before the deadline of 31 July 2022 is due will receive interest on ITR refunds starting in April 2022.

3] Interest rate for ITR refunds: The taxpayer who files an ITR before the deadline is met is eligible for 0.50 percent interest per month on his ITR refund amount.

4] ITR refund taxation: ITR refund amount means income that the taxpayer reported in the applicable financial year. The ITR refund amount is therefore non-taxable. The interest earned on ITR refund amounts is not taxable. However, the income tax slab that applies to the taxpayer after adding interest amount to net annual income of individual is applied.

5] Calculation of interest for ITR refunds Any fraction of a month will be considered one month, while any fraction exceeding one hundred rupees will be ignored when calculating interest on ITR reimbursement. 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. The period of 10 days is considered a full month, and interest will therefore be calculated for 4 months.

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