Income tax refund delayed? Here are possible reasons and checks involved

Reasons for delay in tax refund

More than 7.6 crore income-tax returns (ITRs) had been filed by September 25. According to the I-T department website, of these, 6.98 crore returns have been verified and 5.35 crore processed, leaving nearly 1.63 crore returns pending, which means refunds in these cases are yet to be issued.

For many taxpayers, especially those expecting big refunds, the delay can feel long. What causes the delay? What are checks involved and what should taxpayers do if they don’t get refund in time?

According to Sujit Bangar, founder, Taxbuddy.com, many people assume refunds would be credited immediately but that’s not how the law works. “There is actually no delay in processing refunds, whether large or small. The income-tax department follows the timelines prescribed under Section 143(1) of the income-tax act, which allows up to nine months from the end of the financial year in which the return is filed to process it. Many taxpayers are not aware of this provision and expect refunds immediately after filing,” he said.

While some refunds are processed quickly, even within days, the department has a nine-month statutory window to process returns.

"Refunds are only issued once the return is processed by the Centralised Processing Centre (CPC), Bengaluru. This is where the system cross-verifies all details, matches them against records like Form 26AS, AIS, and TIS, and checks if deductions and credits claimed are correct," said Tarun Kumar Madaan, Tax Head at Coherent Advisors.

When the expected refund is big, the system tends to be more cautious. Automated checks may flag such returns for extra scrutiny, delaying the final payment.

How does the tax department verify refund claims? Manual intervention is minimal. Once the automated checks are cleared, refunds are released.

Reasons for delay in refund

Mismatches between Form 26AS/AIS/TIS and what is reported in the returns remains one of the biggest reasons for refund delays. In such cases, adjustment notices are issued, and delays occur if taxpayers don’t respond quickly.

Then there are bank account issues. Refunds can fail if the account is not pre-validated and linked to PAN. Filing after the due date can also affect both processing priority and interest calculation.

E-verification is another important factor. “The most important thing taxpayers should do is e-verify their ITR within 30 days of filing because processing only starts after that," Madaan said.

Delays are not always about the refund amount. While high-value refunds may sometimes face extra checks, refunds of smaller amounts (up to Rs 10,000) are credited the day the ITR is e-verified. “On the other hand, many returns filed after mid-July are still waiting to be processed, so it’s not always first-come-first-serve,” Madaan said.

Here is what you should do if the refund is delayed

Check ITR status on the portal. It will show if it is pending for e-verification, processed, or processed with refund due.

Ensure your bank account is pre-validated and linked to PAN

Look under “worklist” tab for confirmation requests

Respond promptly to notices for defective returns or mismatches

Raise a grievance on the portal or file a refund reissue request if the original credit failed

Contact the CPC helpdesk directly if needed

Will you get interest on delayed refunds?

Yes, taxpayers are entitled to interest on refunds under Section 244A of the Income Tax Act. “Interest is payable on delayed refunds if the refund is not issued within the statutory nine-month timeline,” Bangar said.

The department pays interest at 0.5 percent a month (6 percent per annum) on the refund amount. "The period of interest depends on the nature of taxes paid and when the return was filed. For example, if the refund arises from TDS, TCS or advance tax and the ITR was filed within the due date, interest is computed from April 1 of the assessment year until the date of refund," Madaan said.

If the return is filed late, interest is computed from the actual date of filing. In the case of self-assessment tax, the interest is calculated from the later of the date of filing the return or payment of tax. No interest is payable if the refund is less than 10 percent of the total tax liability determined, Madaan said.

The best way to avoid delays is to file accurately, e-verify promptly and ensure that the bank account is validated.