(1)3[Where refund of any amount becomes due to the assessee under
this Act], he shall, subject to the provis ions of this section, be entitled to receive, in addition to the said
amount, simple interest thereon calculated in the following manner, namely :-
4[(a) where the refund is out of any tax collected at source under section 206C or paid by way of
advance tax or treated as paid under section 199, during the financial year immediately preceding the
assessment year, such interest shall be calculated at the rate of one -half per cent for every month or
part of a month comprised in the period, -
(i)from the 1st day of April of the assessment year to the date on which the refund is granted,
if the return of income has been furnished on or before the due date specified under
sub-section ( 1) of section 139; or
(ii)from the date of furnishing of return of income to the date on which the refund is granted,
in a case not covered under sub -clause ( i);
(aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated
at the rate of 5[one-half per cent.] for every month or part of a month comprised in the period, from
the date of furnishing of return of income or payment of tax, whichever is later, to the date on which
the refund is granted:
Provided that no interest under clause ( a) or clause ( aa) shall be payable, if the a mount of refund
is less than ten per cent of the tax as determined under sub -section ( 1) of section 143 or on regular
assessment;]
(b)in any other case, such interest shall be calculated at the rate of 5[one-half per cent.] for every
month or part of a m onth comprised in the period or periods from the date or, as the case may be,
dates of payment of the tax or penalty to the date on which the refund is granted.
Explanation. -For the purposes of this clause, “date of payment of tax or penalty” means the dat e on
and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is
paid in excess of such demand.
6[(1A) In a case where a refund arises as a result of giving effect to an order under section
250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly, otherwise
than by making a fresh assessment or reassessment, the assessee shall be entitled to receive, in addition to
the interest payable under sub -section ( 1), an additional i nterest on such amount of refund calculated at
the rate of three per cent per annum, for the period beginning from the date following the date of expiry of
the time allowed under sub -section ( 5) ofsection 153 to the date on which the refund is granted.]