Delays in receiving income tax refunds have emerged as a significant concern for many taxpayers this year, primarily caused by filing errors and incomplete verification processes. Reports indicate that while smaller refunds have been processed for most, numerous taxpayers are still waiting for their returns. Delays stem from issues such as flagged returns for additional review, missed compliance steps, and various taxpayer mistakes. The Income Tax Department has until December 31, 2026, to process returns filed for the fiscal year 2024-25, but many refunds are being held up due to these complications.
Common Reasons for Delayed Refunds
One of the main reasons for delays in refunds is the failure of taxpayers to verify their Income Tax Returns (ITRs) within the stipulated 30 days. According to Central Board of Direct Taxes (CBDT) regulations, any return not verified in time is considered invalid. If verification happens late but before the December 31 deadline of the assessment year, the return is classified as a belated return under Section 139(4), which can significantly slow down the refund process. Furthermore, returns flagged as defective under Section 139(9) necessitate immediate attention. The Central Processing Centre (CPC) or assessing officer issues a notice for corrections within 15 days. If the taxpayer does not respond, the return becomes invalid, stopping any refund processing.
Bank Account Issues and Their Impact
Bank account-related problems also contribute to refund delays. Refunds may not be processed if the nominated bank account is not pre-validated, has been closed before credit, or contains an outdated Indian Financial System Code (IFSC) due to bank mergers. Only accounts that are linked to the Permanent Account Number (PAN) and pre-validated are eligible to receive refunds. Therefore, taxpayers are encouraged to update their bank details on the e-filing portal to ensure smooth processing. Additionally, refunds can be reduced or blocked if taxpayers do not respond to a Section 143(1)(a) intimation, which is issued when discrepancies in income, deductions, or Tax Deducted at Source (TDS) are detected.
Addressing Mismatches and Incorrect Claims
Taxpayers are also encountering challenges when their claims are flagged for mismatches in the Annual Information Statement (AIS). If these discrepancies are not resolved before filing the ITR, it can result in incorrect reductions in refunds. In such scenarios, taxpayers must file a rectification request to correct errors. The CPC has highlighted the necessity of avoiding questionable or inflated claims related to deductions, exemptions, or salary-TDS mismatches. Incorrect claims are increasingly being flagged, which can further delay refunds. Employees are encouraged to submit Form 12BB to their employers throughout the financial year to prevent excess TDS and significant refund claims later.
How to Check Refund Status
Taxpayers can conveniently check the status of their refunds through the official income tax portal. To do this, they need to visit the website and log in using their PAN and password. After logging in, they can navigate to the e-file section, select Income Tax Returns, and view their filed returns. The refund status for the relevant assessment year will be displayed in a timeline view, offering taxpayers clarity on their refund processing status. This straightforward process can help taxpayers stay informed and take necessary actions if delays arise.
Digihunt is not a financial advisor and this is not investment advice.
