ITR Refund Delay in FY25: What Taxpayers Should Know and Do

Many taxpayers have not yet received their Income Tax Return (ITR) refunds for FY 2024–25 (AY 2025–26), and delays are more common this year. While smaller refunds may get processed sooner, larger refunds are undergoing additional checks, especially where discrepancies or mismatches appear in the return.

Why refunds are getting delayed

The Central Board of Direct Taxes (CBDT) has noted that a significant number of returns this year contain unusual claims or require deeper verification. The department is therefore running additional automated and manual checks before releasing refunds.

Common reasons for delay include:

• Arithmetical mistakes in the return
  
• Incorrect or ineligible deductions or exemptions
  
• Claims made beyond the due date
  
• Mismatch in TDS/TCS credits, AIS/TIS entries or Form 26AS
  
• Non-validated or inactive bank account
  
• Adjustment of refund against earlier tax demands
  
• Returns flagged by the system due to high refund amounts

Large refund claims are often routed through more filters, and refunds are also issued in batches depending on the department’s internal schedule.

What taxpayers should do

1. Check the income tax portal regularly
   Log in to the portal and review any alerts, notices or pending actions. The “View Filed Returns” section will show whether your return is under processing, under review, or flagged.
   
2. Check the “Worklist” section
   Taxpayers may receive a request asking them to confirm the correctness of their refund claim. This gives an opportunity to correct wrong deductions or mismatches by filing a revised return.
   
3. Ensure bank account is validated
   Refunds cannot be issued to unvalidated or closed accounts. Confirm that your primary bank account is:
   
   • pre-validated, and
     
   • linked to your PAN.
     
4. Review AIS/TIS and Form 26AS for mismatches
   Even small discrepancies in interest, dividend, salary or TDS entries can delay processing.
   
5. Use grievance channels if needed
   
   • File a grievance under “e-Nivaran” on the portal
     
   • Contact CPC Bengaluru helpline for clarity
     
   • Raise a rectification request under Section 154 if an error exists in the processed return

Will taxpayers receive interest on delayed refunds?

Yes. Under Section 244A, taxpayers are eligible for 0.5% per month (6% per annum) interest on delayed refunds, subject to certain conditions.

How interest is calculated

• If the refund arises from TDS, TCS or advance tax, and the return was filed within the due date, interest is payable from 1 April of the assessment year until the date of refund.
  
• If the return was filed late, interest is payable only from the date of filing.
  
• For refunds arising from self-assessment tax, interest is calculated from the later of:
  
  • the date of filing the return, or
    
  • the date of payment of self-assessment tax.

Two important conditions

• No interest is payable if the refund amount is less than 10% of your total tax liability.
  
• No interest is payable if the delay is attributable to the taxpayer (for example, mismatch, incorrect details, unverified return, etc.).