Section 426 — Interest on Excess Refund | ITA 2025

Section 426 of the Income-tax Act, 2025 corresponds to s. 234 D of the Income-tax Act, 1961. STATUTORY ARCHITECTURE Where refund granted u/s 143(1) is found excess on regular assessment ( s. 143(3) ), interest at 0.5% per month from date…

Section 426 — - INTEREST ON EXCESS REFUND

Section 426 of the Income-tax Act, 2025 corresponds to s. 234D of the Income-tax Act, 1961.

Statutory text — Income-tax Act, 2025

(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.

2. 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. 3

STATUTORY ARCHITECTURE

Where refund granted u/s 143(1) is found excess on regular assessment (s. 143(3)), interest at 0.5% per month from date of refund till date of regular assessment is leviable on the excess.

PRACTITIONER PLANNING NOTES

Common in cases where TDS over-claimed on intimation processing; rectify promptly to limit interest.

CROSS-REFERENCES

s. 423 / 424 / 425 / 426 -- interest framework.
s. 412 (default & demand).
s. 446-448 (penalty Chapter).

← All sections (537)Act 2025 hub

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
2025 provision	1961 counterpart
s. 426 -- Interest on Excess Refund	s. 234D