Announcing the action against the Indian flag carrier and five other airlines on Monday, Transportation Secretary Pete Buttigieg said: "A flight cancellation is frustrating enough, and you shouldn't also have to haggle or wait months to get your refund."
The I-T department did not specify the financial year for the refunds. However, it is believed that the refunds are for tax returns filed for the 2019-20 fiscal.
The airline in a statement said it has already processed close to Rs 1,000 crore of refunds, which is approximately 90 per cent of the total amount it owed to its customers.