ITR Refund Delay: From Bank Errors To Department Checks, 5 Big Reasons Your Refund Gets Stuck
Many taxpayers are still waiting for their Income Tax Return (ITR) refunds for the financial year 2024-25, even after filing their returns several months before the deadline. The Central Board of Direct Taxes (CBDT) has acknowledged these delays, with hopes that most pending refunds will be issued by December. If you are among those still waiting, here are five key reasons why your refund might be delayed:
1. Scrutiny of High-Value ITR Filings and Wrongful Deductions
The Income Tax Department is carefully scrutinizing high-value ITR filings to avoid any discrepancies. Returns with claims of certain deductions are being "red-flagged" by the system, requiring manual review to verify these claims. CBDT Chairman Ravi Agrawal stated that the department is analyzing wrongful deductions claimed in some cases, leading to delays. The department has found instances of incorrect or excessive deduction claims, which require individual analysis and processing, slowing down the overall process.
2. Mismatched or Incorrect Information
One of the most common reasons for ITR refund delays is providing incorrect information in your return. This includes errors such as:
- Incorrect Bank Details: Even a simple mistake like a spelling error in the name or an incorrect bank account number can delay the refund. It is now mandatory to pre-validate your bank account.
- Mismatch with PAN: Discrepancies between the name mentioned in the bank account and PAN card details can cause delays.
- Invalid IFSC Code: Providing an invalid IFSC code will also impede the refund process.
- Mismatch between ITR and Form 26AS: Any mismatch of information between the ITR filed and Form 26AS can also cause delays.
3. Bank Account Issues
Problems with your bank account can also lead to delays. These include:
- Account Not Pre-validated: It is now compulsory to pre-validate your bank account.
- Inactive or Closed Account: If the bank account mentioned in the ITR is closed or inactive, the refund will fail. If you have changed your bank account after filing the return, it’s important to update it on the Income Tax portal.
4. Filing Returns Close to the Due Date
Filing your ITR close to the due date can also cause delays. Due to the high volume of returns filed near the deadline, processing times may increase. It is always recommended to file your Income Tax returns well in advance of the due date.
5. Departmental Checks and Scrutiny
The Income Tax Department is conducting stricter scrutiny of returns for the financial year 2024-25, leading to increased compliance requirements and potential delays. The department may also need additional information from you to process the refund. In some instances, the IT Department has written to taxpayers, urging them to file a revised return to correct missed or incorrectly reported details before the refund can be processed.
While these are some of the primary reasons for ITR refund delays, the CBDT is working to improve processing times and expects to release the bulk of pending refunds by December 2025. Taxpayers can check their refund status online through the Income Tax Department's portal using their PAN card. If the delay is caused by the tax department, taxpayers are eligible for simple interest at 0.5% per month (6% per annum) on the delayed amount under Section 244A. For any queries, you can contact the 'Aaykar Sampark Kendra' at 1800-180-1961 or email refunds@incometax.gov.in.
