The processing of income tax refunds for Assessment Year (AY) 2025-26 has seen noticeable delays compared to previous years. While refunds are usually credited within a few weeks of e-verification, several systemic, procedural, and compliance-related factors have slowed down the process this year. From late release of ITR forms and system upgrades to stricter scrutiny and mismatch issues, taxpayers are experiencing longer wait times for their refunds. Understanding these reasons can help individuals identify possible issues in their own cases and take corrective steps where necessary.
1. Late Start to Filing Process & System Updates
- The ITR utility for forms like ITR-1 and ITR-4 was released only end-May, with others like ITR-2 and ITR-3 following in July, delaying filing and subsequent refund processing.
- The Income Tax Department had to revamp its tech platform to accommodate new laws and revised forms—further pushing back usual timelines.
2. Stricter Scrutiny and Enhanced Verification
- To prevent incorrect or fraudulent refunds, the department has ramped up scrutiny—checking current and past returns more closely.
- Mismatches between your ITR and data from AIS, Form 26AS, or Form 16 may hold up refunds until inconsistencies are resolved.
3. Common Filing / Bank Errors
Delays often stem from simple mistakes or account issues:
- PAN-Aadhaar mismatch, or an inoperative PAN can derail refund processing.
- Incorrect bank details—like wrong account number, IFSC, or name mismatch—, or unvalidated or closed accounts, will block refunds.
- Failure to e-verify the ITR (or returning an invalid ITR-V physically) prevents processing.
4. Backlog from Previous Years
- For pending returns from AY 2023-24 (FY 2022-23), the CBDT has extended the processing deadline to November 30, 2025. This aims to clear backlog but may slow processing of new refunds.
- Delays in processing those older returns could indirectly impact newer ones.
5. System Load, Technical or Manual Processing Delays
- A surge in filings or technical glitches/manual intervention can slow down processing.
⏱ Typical Processing Timeline
- Once e-verified, refunds generally take 4–5 weeks to process.
- Some users report faster processing (~15–20 days), but complex cases may take much longer.
6. Mandatory New Interest Benefit
- Good news: With the ITR filing deadline extended to September 15, 2025, taxpayers will earn ~33% more interest on delayed refunds than usual. But don’t forget—this interest is taxable.
Summary Table
| Reason | What Happens |
|---|---|
| Late release of ITR utilities | Slows start of filing and refund processing |
| Stricter verification | Refund delays for flagged or mismatched returns |
| Filing or bank detail errors | Refund failures or holds until corrected |
| E-verification or validation issues | ITRs remain unprocessed or invalidated |
| Backlog from old returns | Resources diverted; delays in processing new refunds |
| Technical or system delays | Overall slowdown due to load or glitches |
| Extended deadline → more interest | Delays may pay off with extra interest, but interest is taxable |
What You Can Do:
- Check refund status on the Income Tax e-Filing portal under “Refund/Demand Status”.
- Ensure e-verification is complete, your bank details are correct and validated, and PAN is Aadhaar-linked.
- If flagged for discrepancies, respond or correct as per the notices or AIS mismatches.
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For issues without clear cause, use the e-Nivaran grievance facility or escalate through CPC or the Assessing Officer.