Income tax refund not credited? Here are the reasons and this is what you can do

Tax refund

• Tax refunds for FY 2024–25 may take months; processing allowed till Dec 31, 2026
• Delays often caused by data mismatches, bank errors, or extra scrutiny
• Check ITR status, bank details, and respond to notices to resolve refund issues

Did our AI summary help?

If you have filed your income tax return for FY25 and are still waiting for the refund, you are not alone. A large number of taxpayers are experiencing similar delays.

The waiting period might feel longer than usual but the income-tax department is well within the time limit set by law. For FY25, the department is allowed time till December 31, 2026 to process the returns under Section 143(1) of the Income Tax Act. Refunds sometimes take several months to arrive even after the return has been filed and e-verified successfully.

“Where Centralised Processing Centre (CPC) fails to process an ITR within the prescribed time limit and such return is not taken for assessment or reassessment, the taxpayer becomes entitled to tax refund which he claimed in the ITR along-with applicable interest under section 244A which will be computed up to the date of grant of such return,” said Gopal Bohra, Partner -Tax NA Shah Associates.

What are the reasons for the delay in tax refunds?

• Discrepancies between the income disclosed in the ITR and the figures in Form 26AS or AIS.
• Errors in bank account information or accounts that are not validated for refund credit. Deductions or exemptions claimed without eligibility or proper backing.
• Income tax return not e-verified within the prescribed timeline.
• Large or unusual financial transactions are picked up for additional scrutiny.
• Delays arising from internal or system-related processing at the tax department’s end.

“The rollout of Non-Intrusive Usage of Data to Guide and Enable (NUDGE) campaigns — one focusing on foreign asset reporting in November 2025 and another targeting suspected fake donation claims in December 2025 — has introduced additional layers of automated scrutiny. These enhanced compliance checks, while well-intentioned, have also added to refund processing delays,” said Priyal Goel Jain, Partner, NRI Tax Expert, Dinesh Aarjav & Associates.

What should you do if the refund is not credited?

Check ITR processing status 

Log in to the income tax e-filing portal and verify whether your return has been processed, is under processing or marked defective. Refunds are issued only after processing.

Reconfirm bank account details

Ensure your bank account is validated and linked with PAN. A mismatch in account number, IFSC, or name often leads to refund failure.

Check for outstanding tax demands

Refunds may be adjusted against past tax dues. Look for any pending demands under ‘Outstanding Tax Demand’ in your account.

Respond to notices or mismatches promptly

Any pending response to a notice (such as a mismatch in AIS/26AS) can halt refund issuance until resolved.

Raise an online complaint 

If processing is complete but the refund is stuck, file a grievance through the e-Nivaran/CPGRAMS option on the portal.

Consult a tax expert if the delay persists

If the refund is held up due to technical adjustments, incorrect interest calculation or complex income issues, professional intervention can speed up resolution.