The Income Tax Department has triggered concern among a large number of taxpayers by sending out a wave of emails and SMS notifications. These messages inform recipients that their expected income tax refunds have been put on hold. The reason cited is the detection of discrepancies during the processing of their filed Income Tax Returns (ITRs).
Last-Minute Alerts Spark Online Outcry
Affected individuals have taken to social media platforms, particularly X, to express their frustration. A common grievance is the lack of prior communication and the timing of these alerts, which arrive just days before a crucial deadline. The last date for filing a revised return for the Assessment Year 2025-26 is 31 December 2025. This has led to calls for an extension to allow taxpayers adequate time to respond.
The standard message, as seen in screenshots shared online, states: "Processing of the said return was held as it was identified under the risk management process on account of certain discrepancies in the claim of refund. An email with details has also been sent to your registered email address."
Understanding the Refund Hold and Potential Scrutiny
Tax expert Suraj Singh, Founder of SD Singh and Associates, clarifies that refunds flagged under the department's risk management system can be delayed for a few weeks to a couple of months. He notes that an exact timeline is unpredictable, but delays should ideally not extend much longer as the returns have already undergone AI-enabled verification.
Ashok Mehta, Managing Council Member of The Chamber of Tax Consultants, explains that such holds are not immediate cause for panic for honest taxpayers. The system typically identifies mismatches between the filed ITR and data from sources like Form 26AS, AIS, or TIS. It is designed to offer a chance to correct errors. However, Singh warns that taxpayers who have deliberately underreported income or made inflated claims should be concerned, as these intimations aim to boost compliance.
If discrepancies persist, the department may issue a formal demand or clarification notice. "In such cases, refunds are released only after document-based verification (scrutiny) is completed," Singh added.
Who is Affected and Common Reasons for Holds
The alerts have not been confined to one tax regime. Experts confirm that taxpayers under both the old and new tax regimes have received them. However, a majority appear to be those under the old regime, likely due to its reliance on various deductions, which can sometimes lead to errors or inflated claims.
Some frequent reasons leading to refund holds include:
- Mismatch between declared income and Form 26AS / AIS / TIS data.
- Non-reporting of income from capital gains, F&O trades, or foreign assets.
- Questionable or inflated deduction claims (HRA, insurance, donations).
- High-value transactions like property sales or forex spending without corresponding income disclosure.
The Critical December 31 Deadline and Consequences
With the December 31 deadline for revisions fast approaching, taxpayers must act swiftly. Suraj Singh emphasizes that missing this date leaves only one option: filing an Updated Return (ITR-U). This route attracts additional tax, interest, and penalties. Crucially, refund claims cannot be made or removed in an ITR-U, potentially causing taxpayers to permanently lose a legitimate refund.
Ashok Mehta notes that if no corrective action is taken, the department may still process the return and later issue a notice under Section 133(6) for verification. An unsatisfactory response could lead to scrutiny under Section 147.
The key advice for taxpayers who have received these alerts is clear: remain calm, review your ITR details meticulously against official tax statements, and correct any genuine errors before the year-end deadline to secure your rightful refund and avoid further complications.
