A significant number of taxpayers across India who submitted their Income Tax Returns (ITR) for the Assessment Year 2025-26 in September are facing an unexpected wait. Their income tax refunds, the amount returned when tax paid exceeds the actual liability, have not yet been credited to their bank accounts, causing concern and financial planning hurdles.
Understanding the Refund Process and Common Delays
An income tax refund is essentially a reimbursement from the government when an individual has overpaid their taxes. This overpayment can occur due to various reasons such as high Tax Deducted at Source (TDS), advance tax payments, Tax Collected at Source (TCS), or self-assessment tax. The final tax calculation, considering all eligible deductions and exemptions, is done by the Income Tax Department during assessment, and any surplus is sanctioned as a refund.
The refund process only commences after the taxpayer has successfully e-verified their filed return. Officially, the department states that it typically takes between four to five weeks for the refund amount to be deposited into the taxpayer's account post-verification. However, the current experience of many September filers indicates a longer processing timeline.
What to Do If Your Refund is Delayed?
If the refund is not received within the expected 4-5 week window, taxpayers are advised to take proactive steps. First, they should check for any intimation under Section 143(1) of the Income Tax Act, which might highlight discrepancies in the filed ITR that need correction. It is also crucial to regularly monitor the registered email for any communication from the IT department and to check the refund status on the official e-filing portal.
To access these services, taxpayers need their valid user ID and password, a PAN card linked with their Aadhaar number, and an ITR filed claiming a refund.
Decoding Refund Status and Reasons for Failure
The e-filing portal displays different statuses for a refund. A fully processed refund will show as "Refund Issued." Sometimes, the department may adjust the refund against outstanding demands, leading to statuses like "Partially Adjusted" or "Fully Adjusted." A status of "Failed" indicates the credited amount could not be transferred to your account.
Several technical reasons can cause a refund to fail, even after it is processed by the department:
- Non pre-validated bank account: It is now mandatory to pre-validate your bank account on the e-filing portal.
- Name mismatch: The name on the bank account must precisely match the details on the PAN card.
- Invalid IFSC code: An incorrect Indian Financial System Code (IFSC) will halt the transaction.
- Closed bank account: If the account mentioned in the ITR has been closed, the refund will inevitably fail.
Deadline for Belated Returns and Associated Costs
For those who missed the original deadline, there is still an opportunity to file. While the last date for filing the original ITR for the financial year 2024-25 (AY 2025-26) was September 16, 2024, taxpayers can file a belated return until December 31, 2025.
This provision is vital as it allows individuals to comply with tax laws and avoid penalties for non-filing. However, filing a belated return comes with financial implications. Taxpayers will be liable to pay a late filing fee under Section 234F of the Income Tax Act, along with interest on any outstanding tax liability. Therefore, while it resolves the issue of non-compliance, it does not come without cost.
In conclusion, while delays in refund processing can be frustrating, understanding the procedure, regularly checking the official portal for status and intimations, and ensuring bank details are accurate can help taxpayers navigate the situation. For those yet to file, the window for belated returns remains open until the end of 2025, albeit with additional charges.
