Paid extra taxes? You may get higher income tax refund due to ITR deadline extension; here's why

The income tax refund is issued to a taxpayer when he has paid more taxes than he is liable to pay. Under Section 244A, the tax department is required to pay simple interest at the rate of 0.5% per month, or part of a month, on the excess tax paid as TDS, TCS, or advance tax.

How will the interest be paid?

The interest on income tax refund depends on the actual filing of returns by taxpayers and their processing by the tax department.

For AY 2025-26, the interest on the income tax refund amount will be payable from April 1, 2025, if you file your return before the extended due date, i.e., September 15, 2025. In case of returns file after the due date, interest will be paid from the date of ITR filing till the date of refund.

For example, let's assume you file your return on September 10 and a refund of ₹20,000 is issued on September 30, 2025. In this case, you will be eligible for 0.5% interest from April 1 till September 30, 2025.

You will get interest for the full six months from April till September, which is ₹20,000x0.005x6 = ₹600. In case you file your return on July 15 and the refund is issued by July 31, then the interest will be ₹20,000x0.005x4 = ₹400.

Should you delay ITR filing till September?

The excess interest that you may get due to the ITR deadline extension is minuscule. So, instead of delaying your ITR filing till September for some interest, it will be better to file as early as possible. This will ensure you get your refunds timely, complete the ITR process early for peace of mind, or even get more time for revising the filed ITR if required.

Please note that you can revise your ITR for free before the due date.

In FY 2024-25, the income tax department issued refunds worth ₹1.9 lakh crore till March 31, 2025, to non-corporate taxpayers, including individuals and HUFs. The refunds paid till March 31, 2024, to non-corporate taxpayers were around ₹1.57 lakh crore.

Also note that interest payment will be subject to verification of the refund claim by the tax department. If found ineligible for a refund, you won't get any extra interest because of the due date extension.