Income Tax Refund Delays: Common Mistakes Keeping Many ITRs Pending
Delays in receiving income tax refunds have become a significant concern for many taxpayers this year, primarily due to filing errors and incomplete verification processes. According to a report by Economic Times, while smaller refunds have been processed for most, numerous taxpayers are still awaiting their returns. The delays are attributed to 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 most prevalent reasons for delayed refunds is the failure of taxpayers to verify their Income Tax Returns (ITRs) within the stipulated 30 days. According to the Central Board of Direct Taxes (CBDT) rules, any return that is not verified on time is deemed invalid. If verification occurs late, but before the December 31 deadline of the assessment year, the return is classified as a belated return under Section 139(4). This classification can significantly slow down the refund process. Additionally, returns flagged as defective under Section 139(9) require immediate attention. The Central Processing Centre (CPC) or assessing officer issues a notice for corrections within 15 days. If the taxpayer fails to respond, the return is rendered invalid, halting any refund processing.
Bank Account Issues and Their Impact
Bank account-related problems also contribute to refund delays. Refunds may fail to process if the nominated bank account is not pre-validated, has been closed prior to credit, or contains an outdated Indian Financial System Code (IFSC) due to bank mergers.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 for receiving refunds. Taxpayers are advised to update their bank details on the e-filing portal to ensure smooth processing of their refunds. Furthermore, 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 facing challenges when their claims are flagged for mismatches in the Annual Information Statement (AIS). If discrepancies are not addressed before filing the ITR, it can lead to incorrect reductions in refunds. In such cases, taxpayers must file a rectification request to correct the errors. The CPC has emphasized the importance 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 large refund claims later.
How to Check Refund Status
Taxpayers can easily check the status of their refunds through the official income tax portal. To do so, they need to visit the website and log in using their PAN and password. Once logged 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, providing taxpayers with clarity on their refund processing status. This straightforward process can help taxpayers stay informed and take necessary actions if delays occur.
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