You are entitled to an income tax refund under **Section 237 of the Income Tax Act, 1961** whenever the tax paid — through TDS, advance tax, or self-assessment tax — exceeds your actual tax liability for the year. Filing your ITR is the trigger; there is no separate refund application.

## How a Refund Arises

The most common cause is **excess TDS on salary**. Your employer deducts TDS under **Section 192** based on an estimated annual salary and the declarations you submit. If you later claim deductions (HRA, 80C, 80D, home loan interest) not fully accounted for by your employer, your actual liability drops and the excess TDS becomes a refund.

Other common sources:
- TDS on FD interest under **Section 194A** (10% deducted even if your slab rate is lower or nil)
- TDS on dividends under **Section 194** (10% on dividends above ₹5,000)
- TDS on rent under **Section 194I**
- Advance tax paid in excess of final assessed tax

**New Income Tax Act, 2025:** The new Act, which governs returns from Tax Year 2026-27 (FY 2026-27) onwards, retains the refund entitlement and its interest provisions under equivalent sections. For AY 2026-27 (covering FY 2025-26 income), the Income Tax Act, 1961 governs. The new Act replaces the concept of "Assessment Year" with "Tax Year."

## Interest on Delayed Refund — Section 244A

If the Income Tax Department does not process your refund within the prescribed time, you earn interest at **0.5% per month (or part thereof)** under **Section 244A**:

- If the return is filed **on or before the due date (31 July 2026):** Interest runs from **1 April 2026** to the date of refund grant.
- If the return is filed **after the due date:** Interest runs from the **date of filing** to the date of refund grant.

This means filing late costs you the §244A interest for the months between April and your actual filing date. On a ₹50,000 refund, that is ₹250 per month of delay — not catastrophic, but avoidable.

Section 244A interest is **taxable in the year of receipt** and will appear in your AIS for that year.

## Worked Example

Arun has salary income of ₹10,00,000. His employer deducted TDS of ₹1,10,000 under §192. After claiming HRA (₹1,20,000 under §10(13A)), 80C (₹1,50,000), and 80D (₹25,000), his tax under the old regime:

| Item | Amount |
|------|--------|
| Net taxable income | ₹7,05,000 |
| Tax + 4% cess | ₹75,816 |
| TDS deducted | ₹1,10,000 |
| **Refund due** | **₹34,184** |

He files on 20 July 2026 (before due date). Refund credited on 5 October 2026.
§244A interest = ₹34,184 × 0.5% × 6 months (Apr–Sep) = ₹1,026.

## Steps to Ensure Fast Refund

**1. Pre-validate your bank account** on the Income Tax portal (My Profile → Bank Account) before filing. Refunds credit only to pre-validated accounts linked to your PAN.

**2. Cross-check AIS and 26AS before filing.** Any mismatch between the TDS you claim and what the portal shows triggers manual review under §143(1), delaying the intimation and the refund.

**3. Ensure PAN-Aadhaar linking is complete.** Unlinked PANs cause inoperative status under the proviso to Section 139AA — TDS is charged at higher rates and refunds are held.

**4. E-verify within 30 days of filing.** Under Rule 12 of the IT Rules (as amended), an unverified return is treated as not filed. Refund processing does not begin until verification.

**5. Use correct IFSC and account number.** A single digit error in bank details causes a failed credit, requiring a Refund Re-issue request — adding 2–4 weeks to the timeline.

## Processing Timeline

After e-verification, your return is processed under **Section 143(1)**. The intimation order under §143(1) is the refund order.

| Scenario | Typical Timeline |
|----------|-----------------|
| Filed before 31 July, no AIS mismatch | 20–45 days post e-verification |
| Filed after 31 July or minor mismatches | 60–90 days |
| AIS mismatch or defective return notice | 90–180 days after resolution |

## What to Do If Your Refund Is Stuck

1. **Check status** at incometax.gov.in → e-File → [Income Tax Return](https://www.harunraaj.com/services/itr-filing)s → View Filed Returns → select AY → check refund status.
2. **If intimation is issued but refund not credited:** Bank account mismatch. Raise Refund Re-issue request on the portal (e-File → Refund Reissue).
3. **If no intimation after 90 days:** Raise a grievance under e-Nivaran on the portal (Grievance → Submit Grievance → Refund Not Received).
4. **If a demand appears instead of refund:** The department may have offset your refund against an outstanding demand under **Section 245**. They must issue a notice before adjustment. File a response on the portal agreeing or disagreeing with the demand.

## Frequently Asked Questions

**I filed ITR in July — when will I get my refund?** Typically within 4–6 weeks of e-verification if there are no AIS mismatches or defects. Track in real time at the portal under View Filed Returns.

**The portal shows refund "failed" — what does this mean?** Your bank account details are incorrect or the account is not pre-validated. Log in to the portal, go to My Profile → Bank Account, add correct details, pre-validate, then raise a Refund Re-issue request.

**Can the department adjust my refund against an old demand without telling me?** No — under §245, the department must issue a notice proposing the adjustment. You have 30 days to respond. If you disagree with the old demand, file your objection immediately.

**Will I get Section 244A interest if my refund is delayed?** Yes — the interest is mandatory and must be included in the intimation under §143(1). If your intimation shows the correct refund without §244A interest and the credit was delayed, the additional interest will be paid along with the refund.

**I made an error in my return and my refund is lower than expected. Can I revise it?** Yes — a revised return under **Section 139(5)** can be filed any time before 31 December 2026 for AY 2026-27. File the revised return and the updated §143(1) intimation will reflect the corrected refund.

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Want a CA to reconcile your TDS credits and ensure your full refund reaches you? [File your ITR with Harun Raaj & Associates →](/services/itr-filing)

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## See Also

- [Late ITR Filing Penalty for AY 2026-27 — Section 234F, 234A, and 234B Explained](https://www.harunraaj.com/blog/late-itr-filing-penalty-ay-2026-27)
- [Can I File ITR Without Form 16? — Complete Guide for AY 2026-27](https://www.harunraaj.com/blog/itr-without-form-16)
- [Your RSUs Are Not Just Salary: The Two Separate Disclosures Required in AY 2026-27 ITR](https://www.harunraaj.com/blog/schedule-fa-rsu-foreign-assets-itr-2-ay-2026-27)

Canonical: https://www.harunraaj.com/blog/income-tax-refund-section-237