ITR Deadline Extended to September 15: Here's How You May Earn More Interest on Your Tax Refund

By Siddhi Jain | Jun 2, 2025, 20:39 IST

In a major relief to taxpayers, the Central Board of Direct Taxes (CBDT) has extended the Income Tax Return (ITR) filing deadline for the financial year 2024-25 (AY 2025-26) from July 31 to September 15, 2025. While this offers extra time for filing returns, there's another added benefit: you could receive a higher interest on your income tax refund.

Thanks to Section 244A of the Income Tax Act, this extension could increase your interest earnings on refunds by up to 33%. Let’s break down how this works.

How Does the ITR Refund Interest Work?

Under Section 244A, the Income Tax Department pays simple interest at 0.5% per month (6% annually) on the refund amount. This interest is calculated from the start of the assessment year (April 1) until the date the refund is issued.

Now that the return filing deadline has been pushed from July 31 to September 15, taxpayers who file within this extended window will still be eligible for interest for the additional 1.5 months. That translates to a potential 33% increase in the refund interest you would otherwise receive.

When Will Refunds Be Processed?

If you file your ITR within the new due date of September 15, and a refund is due, the Income Tax Department is likely to process the refund by October 2025. In such cases, the interest paid on the refund will account for the extra time, boosting the overall payout.

Who is Eligible for Refund Interest?

According to tax rules:

Interest is paid only if your refund exceeds 10% of the total tax paid, including TDS, TCS, or advance tax.
The interest earned on tax refunds is fully taxable and must be reported as “income from other sources” in your next year’s ITR.

Refund Trends from Previous Years

In FY 2024-25, the Income Tax Department issued over ₹1.9 lakh crore in refunds to non-corporate taxpayers including individuals and HUFs.
In FY 2023-24, the refund amount was over ₹1.57 lakh crore.

These figures reflect the increasing pace and scale of refund disbursement, and the benefit of receiving timely interest.

Should You Wait Until September 15 to File?

While the extended deadline might seem like a good reason to delay, tax experts advise against waiting till the last minute. Here’s why:

Filing early reduces chances of errors and processing delays.
Early filing leads to faster refund processing.
Interest increase is marginal—the extra 1.5 months translates to just 0.75% more on your refund.

So, unless you're facing documentation delays or other genuine reasons, it's best to file by July 31 itself.

Conclusion

The extension of the ITR deadline to September 15, 2025, offers flexibility and potential for slightly higher interest on refunds. However, for smoother processing and peace of mind, filing your return earlier remains the smarter choice.

If you're expecting a refund, stay informed about the interest rules, eligibility, and tax implications—because every rupee of interest counts.