Filing your Income Tax Return is more than just a yearly ritual. It is an important step toward financial stability. However, for many, the most anticipated part comes after the filing, i.e., the tax refund! But what happens when that eagerly awaited refund does not arrive on time? Why do delays occur, and what can you do about them? Dive into this blog to explore the common reasons behind IT refund delays and the remedies available to taxpayers.
An Income Tax Refund is the money the Income Tax Department returns to a taxpayer when they have paid more tax than their actual liability for a financial year. Individuals and businesses pay taxes in India through methods like TDS (Tax Deducted at Source), TCS (Tax Collected at Source), Advance Tax, or Self-Assessment Tax. Sometimes, the tax already paid may be higher than the actual tax owed due to factors such as excess TDS deductions, advance tax payments, higher deductions, exemptions, set-off of losses, or tax credits. In such cases, taxpayers are eligible for a tax refund, i.e., the excess amount paid over and above the tax liability for the year. This refund is credited directly to the bank account mentioned by the taxpayer in their ITR at the time of filing the return, after the ITR is duly processed or completion of the ITR assessment, which is typically within 4-5 weeks after filing the ITR.
After a taxpayer files their Income Tax Return (ITR), the Income Tax Department processes it under Section 143(1) of the Income Tax Act. This section deals with the intimation sent to the taxpayer, reflecting,
The income and tax as per the return filed by the taxpayer, and
The income and tax as computed by the department.
If the department finds that the taxpayer has paid more tax than the actual tax liability for the year, the intimation under Section 143(1) will confirm that a refund is due. Once this intimation is sent, the refund is generally credited directly to the taxpayer’s bank account.
Taxpayers can check the status of their refund due using the following steps,
Visit the Income Tax e-Filing portal and log in with your account details.
Go to ‘e-File’, then ‘Income Tax Returns’ and select ‘View Filed Returns’.
Taxpayers can check the status of their current and previous returns on the screen.
Click on ‘View Details’ to see the exact status of the tax refund due.
The income tax refund is usually credited to the notified bank account within 4-5 weeks of successfully filing the ITR after it is duly processed. However, if the refund due is not credited to the bank account, the possible reasons for the same are highlighted below.
One of the most common reasons for a delay is mistakes in the ITR. If the taxpayer has entered incorrect details such as their PAN, bank account number, IFSC code, or income figures, the Income Tax Department may take longer to process the return. In some cases, refunds cannot be issued at all until the details are corrected. Even a small error, like a mismatch in personal details, can slow things down.
The department matches the details filed in the ITR with the information available in Form 26AS, AIS (Annual Information Statement), and TIS (Taxpayer Information Summary). If there is a mismatch between the TDS (Tax Deducted at Source) reported by the taxpayer and what the deductor has filed, the refund will be put on hold until the discrepancy is resolved.
Filing an ITR is not the last step, as it must be verified either through Aadhaar OTP, net banking, or by sending a signed ITR-V to CPC Bengaluru. If the taxpayer forgets to verify the return within the due time (30 days), the department does not process it, which directly delays the refund.
The taxpayer’s bank account must be linked with PAN and pre-validated on the income tax portal for refunds to be duly credited. If this step is missed or if the bank rejects the refund due to incorrect details, the amount will not be credited until the issue is fixed.
If the taxpayer has any outstanding tax dues from previous years, the Income Tax Department can adjust the refund against those dues. In such cases, the refund may get delayed, or the amount received may be lower than expected. Taxpayers usually receive a notice if such an adjustment is made.
Sometimes, the department may take extra time to process returns that need further verification. For example, cases involving high-value transactions, unusual claims for deductions, or large refund amounts. In such cases, the refund is released only after the scrutiny process is completed.
Even if everything is correct from the taxpayer’s side, sometimes refunds get delayed simply due to high volumes of returns being processed during peak filing season. In such cases, it is just a matter of waiting a little longer.
The Income Tax Department provides updates on the refund status, which the taxpayer can check by logging into their account. However, the meaning of these statuses and their interpretation can create confusion for taxpayers. Here are the details of the refund status on the IT portal and their interpretation to simplify the process.
If the refund due is acknowledged by the IT Department, yet the refund credit is delayed, taxpayers can file a refund re-issue request with the department.
The steps for raising the refund re-issue request are,
Log in to the Income Tax e-Filing portal.
Go to the ‘My Account’ tab and click on the ‘Refund Reissue’ link to raise the refund reissue request.
Select the Assessment Year for which the refund failed and enter your PAN and refund amount.
Review your bank details, and if the bank is not validated, complete the validation first.
Choose the validated bank account and submit the request.
The Income Tax Department will then process the request and credit the refund to the correct account.
Delays in receiving an Income Tax Refund can be scary as well as frustrating. However, they usually happen due to common issues like errors in filing, mismatched TDS details, incomplete verification, bank account problems, or pending notices. While most delays can be avoided or fixed by double-checking return details, some common errors leading to refund delays include not verifying the ITR on time or the bank account not being pre-validated. Thus, with a little care and timely action, taxpayers can make sure their rightful refund reaches them smoothly and without unnecessary delay.
This post talks about one of the most important queries of taxpayers and the remedies at their disposal. Let us know your thoughts on this topic or if you need further information on the same, and we will address it soon.
Till then, Happy Reading!
Read More: How to Declare Mutual Fund Returns in ITR?
Marisha Bhatt is a financial content writer @TrueData.
She writes with the sole aim of simplifying complex financial concepts and jargon while attempting to clarify technical and fundamental analysis concepts of the stock markets. The ultimate goal is to spread vital knowledge and benefit the maximum audience. Her Chartered Accountant background acts as the knowledge base to help clarify crucial concepts and create a sound investment portfolio.
excellent topic
Thank you for your valuable feedback Sir!
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informative
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