Section 426 — Interest on excess refund
Old Act equivalent: Section 234D of IT Act 1961 Sub-part: E—Interest chargeable in certain cases
Statutory Text
- (1) Subject to the other provisions of this Act, where any refund is granted to the assessee under section 270(1), and—
(a) no refund is due on regular assessment; or
(b) the amount refunded under section 270(1) exceeds the amount refundable on regular assessment, the assessee shall be liable to pay simple interest at the rate of 0.5% on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. (2) Where, as a result of an order under section 287 or 288 or 359 or 363 or 365(10) or 368 or 377 or 378, the amount of refund granted under section 270(1) is held to be correctly allowed, either in whole or in part, then, the interest chargeable, if any, under sub-section (1) shall be reduced accordingly. (3) Where in relation to a tax year, an assessment is made for the first time under section 279, the assessment so made shall be regarded as a regular assessment for the purposes of this section.
- Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, clause (f) read as under :
“(f) any tax credit allowed to be set off as per section 206(1)(m) to (p) and 206(2)(e) to (h).” F.—Levy of fee in certain cases [Fee for default in furnishing statements.
Provisos
None.
Explanations
None.
Tables
None.
Key Structure
- Applies to: Assessees who received refund under section 270 (summary assessment) which is reduced on regular assessment.
- Conditions: Simple interest at 0.5% per month on excess refund from date of refund to date of regular assessment.
- Time limits: From date of refund granted to date of regular assessment.
- Monetary limits: 0.5% per month on excess refund amount.
- Exceptions: Not applicable if no refund was granted at summary assessment stage.
Cross-References
- Section 206
- Section 270
- Section 279
- Section 287
Amendment Notes
Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, clause (f) read