Taxpayers across India are facing significant delays in receiving their income tax refunds, with many reporting waiting periods exceeding five months after filing their ITRs. The Income Tax Department has intensified its scrutiny process this year, resulting in increased notices to taxpayers for various discrepancies in their tax filings.

Common Reasons for ITR Refund Delays

Several factors contribute to the prolonged processing times for income tax refunds:

Verification Requirements

One of the most critical factors causing refund delays is the failure to verify ITRs after filing. Filing the return is only the initial step in the process. Taxpayers must complete verification through one of the approved methods:

• Aadhaar OTP verification
• Net banking authentication
• Electronic Verification Code (EVC)
• Physical submission of signed ITR-V to CPC Bengaluru

Unverified returns are considered invalid, and no refunds are processed for such filings.

Enhanced Scrutiny Process

The Income Tax Department has implemented a more rigorous review process, particularly focusing on identifying mismatches between taxpayer-reported income and official records. When discrepancies arise between filed returns and documents like Form 26AS, Annual Information Statement (AIS), and Taxpayer Information Summary (TIS), the department flags these cases, resulting in delayed refund processing.

Recommended Actions for Taxpayers

Taxpayers experiencing refund delays should follow a systematic approach to resolve their issues:

Immediate Steps

1. Portal Review: Log into the income tax e-filing portal and examine the "Pending Actions" tab for any outstanding notices
2. Document Analysis: Download any intimations and carefully compare them with filed returns, Form 26AS, and AIS
3. Response Strategy: Accept corrections if the department's assessment is accurate, or submit supporting documents to contest discrepancies

Refund Tracking Process

Taxpayers can monitor their refund status through the official income tax website:

Key Compliance Points

Taxpayers should prioritize several critical aspects to avoid future delays:

• Prompt Verification: Complete ITR verification immediately after filing
• Accurate Documentation: Ensure all income sources match official records
• Regular Monitoring: Check the e-filing portal consistently for updates and notices
• Bank Details: Verify and update bank account information for refund processing

The current delays, while concerning, are part of the department's enhanced compliance verification process. Taxpayers who maintain accurate records and respond promptly to departmental queries can expect resolution of their refund issues through proper follow-up procedures.

Millions of taxpayers across India continue to await their income tax refunds for Assessment Year 2025-26, with processing delays potentially extending well into 2026. The Income Tax Department's own portal data reveals the scale of pending cases and the legal framework governing refund timelines.

Current Processing Status

As of January 6, 2026, approximately 61 lakh income tax returns remained unprocessed according to figures available on the Income Tax Department's portal. This substantial backlog has left millions of taxpayers waiting for their refunds despite the December 31, 2025 deadline for belated returns having passed.

The department faces no immediate legal consequences for these delays, as Section 143(1) of the Income Tax Act provides a comprehensive processing window that extends well beyond traditional filing deadlines.

Legal Framework for Processing Delays

Under Section 143(1), tax returns for financial year 2024-25 can be processed by the Income Tax Department up to December 31, 2026. This provision effectively grants authorities a one-year window to complete processing, regardless of whether belated and revised return deadlines have expired.

Interest Compensation Mechanism

Taxpayers affected by processing delays are entitled to interest compensation under Section 244A of the Income-tax Act, 1961. The department must pay interest at 0.5% per month on delayed refunds, calculated from either the date tax was paid or the return filing date, whichever comes later, until the refund is credited.

However, an important exemption applies to this interest provision. Refunds amounting to less than 10% of the overall tax paid for the year do not attract any interest compensation.

Factors Contributing to Delays

Processing delays are primarily attributed to enhanced verification measures implemented this year. Returns that do not fully align with departmental data face extended processing times, particularly those with discrepancies in:

• Form 26AS details
• Annual Information Statement (AIS) data
• Taxpayer Information Summary (TIS) information

Processing Speed Variations:

• Fastest Processing: Salaried taxpayers with straightforward returns
• Slower Processing: High-value refund claims and deductions not supported by Form 16
• Extended Delays: Senior citizens (except those aged 75+ with only pension/interest income) facing data discrepancies
• Minimal Impact: Returns with no refund or tax demand

Outlook for Taxpayers

For many taxpayers, the current delays may be less about irregularities and more about the legally permitted processing window that runs until December 31, 2026 for Assessment Year 2025-26. While this provides the department with adequate time to complete thorough verifications, it means taxpayers may need to wait considerably longer for their refunds than in previous years.

The stricter verification measures, while causing delays, are designed to ensure accuracy and prevent fraudulent claims, though they have significantly impacted processing speeds across various taxpayer categories.