Income Tax Refund: Have You Not Received Income Tax Refund Yet? Know Why It Is Delayed And What To Do
Income Tax Refund: Even though the deadline for filing belated Income Tax Returns (ITR) for the Assessment Year 2025–26 passed on December 31, lakhs of taxpayers are still waiting for their returns to be processed and refunds to be credited. According to data from the Income Tax Department, out of approximately 8.80 crore returns filed, about 8.66 crore have been verified. However, nearly 63 lakh returns are still pending processing.
Naturally, taxpayers are concerned about why so many returns are stuck. Tax experts suggest that this is not a system failure but largely an intentional, compliance-driven delay by the department.
Why Is Your Refund Stuck?
Experts point out that stricter data verification and the use of advanced technology are the primary reasons for the delay this year. According to Sandeep Bhalla, Partner at Dhruva Advisors, the department has expanded its use of data analytics and pre-emptive compliance checks.
- Data Mismatch: The Income Tax Department now has access to vast third-party data, including TDS filings, Annual Information Statements (AIS), Form 26AS, bank interest, and mutual fund transactions. If the figures in your return do not strictly match this data, the system automatically flags the return, pausing the processing.
- The ‘Nudge’ Campaign: The CBDT launched a “Nudge” campaign in December 2025. Taxpayers whose returns show discrepancies are being proactively informed via SMS or email. The processing of these returns is kept in abeyance until the taxpayer responds to the alert or corrects the mismatch.
Legal Timelines and Department Rules
Many taxpayers worry that a pending return after December 31 signals a problem. However, experts assure there is no need for immediate alarm. Under the Income-tax Act, the Centralised Processing Centre (CPC) has a window of nine months from the end of the financial year to process returns. Effectively, for AY 2025–26, the department has time until December 31, 2026. Given that over 90% of verified returns have already been processed, the current pendency is well within legal limits.
Other Contributing Factors
Tax expert CA Dr. Suresh Surana highlights several operational factors that have contributed to the slower pace this year:
- Late Release of Forms: Several ITR forms and utilities were released later than usual (between June and August) for this assessment year. This naturally pushed back the entire filing and processing cycle.
- Scrutiny on Foreign Assets: The department has intensified risk-based reviews, particularly for cases involving undisclosed foreign assets based on AEOI data. Affected taxpayers have been sent alerts to revise their returns, leading to longer processing times.
Will You Get Interest on Delayed Refunds?
Yes, Section 244A of the Income-tax Act provides for interest on delayed refunds, subject to certain conditions:
- The refund amount must exceed ₹100 or 10% of the total tax paid.
- Interest is paid at a rate of 0.5% per month (simple interest).
- For returns filed on time, interest is calculated from April 1 of the assessment year. However, for belated returns, interest is calculated only from the date of filing.
What Should Taxpayers Do Now?
If your refund is still awaited, experts advise against panic and suggest the following steps:
- Regularly log in to the e-filing portal to check your return status.
- Check your registered email and SMS for any alerts or notices from the department.
- Compare your filed return with your AIS and Form 26AS to identify any missed discrepancies.
- If a mismatch is found, file a revised or updated return immediately.
In most cases, the delay is due to the department seeking cleaner data and voluntary compliance, not because the return has been rejected.
