Section 426 — Interest on excess refund

(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