Why Does Your Income Tax Refund Get Delayed? Hidden Reasons Explained

The Income Tax Department's refund status user manual states that the refund should preferably be processed and deposited to the bank account within 4 to 5 weeks of the tax return being filed and the e-verification procedure being finished. Nevertheless, a number of factors might cause the refund to be rejected or delayed.

Taxpayers are currently awaiting their income tax refunds after submitting their income returns by the September 16 deadline for AY 25-26. If the total amount of taxes paid surpasses the actual amount due (either through TDS, TCS, advance tax, or self-assessment tax), the income tax department will initiate a refund.

According to the refund status user manual published by the Income Tax Department, the tax department does not begin processing refunds until the taxpayer has e-verified the return. The refund typically takes four to five weeks to appear in the taxpayer's account. If a taxpayer fails to receive his or her return within this time frame, they should check their email for any alerts from the IT department regarding the refund and inquire about any discrepancies in the filed ITR.

As per CA (Dr.) Suresh Surana, while certain refunds pertaining to simpler forms such as ITR-1 and ITR-4 are processed promptly once the Income Tax Return (ITR) is verified, there are several lesser-known reasons why a refund may take longer than expected as follows:

Data Mismatch Across Forms

Refunds are often held up if the income, deductions, or tax credits reported in the ITR do not match with information in Form 26AS, Annual Information Statement (AIS), or Taxpayer Information Summary (TIS). Even minor discrepancies such as differences in TDS entries or NPS contributions can lead to processing delays.

Bank Account Validation Issues

Refunds can only be credited to pre-validated bank accounts linked with the taxpayer's PAN and Aadhaar. If the account is not properly validated or has been closed/inactive, the refund may fail and remain pending until rectified.

Incorrect Filing Details

Common mistakes such as quoting the wrong assessment year, entering incorrect IFSC codes, or errors in PAN-Aadhaar linkage may also delay the refund process.

Processing Under Scrutiny or Adjustment

The Centralised Processing Centre (CPC) may hold back refunds if the return is flagged for further review, or where tax demands from previous years are pending. In such cases, the refund is adjusted against outstanding dues, or the department may issue notices seeking clarification.

Delay in Verification of ITR

The processing starts only after ITR verification (via Aadhaar OTP, net banking, or physical ITR-V submission). Any delay in verification automatically pushes the refund timeline further.

High-Value Transactions Under Review

Where taxpayers have reported (or missed reporting) high-value transactions such as property sales, large securities trades, or foreign remittances, refunds may be withheld until the data is reconciled by the tax department.

Refund delays are not always due to inefficiency but often arise from data mismatches, compliance gaps, or system validations. Taxpayers should ensure timely ITR verification, accurate reporting, reconciliation of Form 26AS/AIS data, and bank account pre-validation.

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