This income tax return (ITR) filing season, the process of issuing refunds on any excess tax deducted has been faster, especially for salaried individuals with basic financial dealings who have used form ITR-1, say chartered accountants.
The income tax department delayed releasing forms ITR-2 and ITR-3, which meant that many taxpayers with capital gains or foreign income had to wait to file their returns. On the upside, taxpayers who filed returns using ITR-1 and ITR-4 (Sugam) saw their returns and, thus, refunds being processed faster.
Check refund status online
However, if you haven’t received your refund, you should log in to the e-filing portal (incometax.gov.in), go to e-file > income tax returns > view filed returns and ascertain the refund status.
You can also call the State Bank of India's (refund banker designated by the I-T department) helpline number (18004259760) for the same. Here’s a list of the most common causes of delay or rejection of refund claims:
ITR-AIS mismatch
ITR processing and refund credit could face hurdles if the data in your return does not match the information in the AIS (annual information statement) or Form-26AS (tax credit statement).
Also read: ITR filing: New income tax rules for 2024-25 to keep in mind before filing return
Aadhaar-PAN not linked
Your claim could also be delayed or denied or there could be a failure in crediting the refund to your bank account if the Aadhaar and PAN have not been linked. In such cases, the date and reasons for the failure will be displayed.
For example, if your PAN is not operative as it is not linked to your Aadhaar, the website will display an alert, asking you to complete the process after paying the penal fee of Rs 1,000 under Section 234H of the Income-tax Act.
Use of wrong ITR form
If you pick the wrong form for filing returns—for instance, ITR-1 when ITR-2 was the form you should have used—you will be shown as having concealed income and transactions that you ought to have disclosed in ITR-2. For example, if you earned foreign income or owned any foreign assets in 2024–25, you have to use ITR-2.
These disclosures are precluded in ITR-1, and you could end up with a notice for non-disclosure from the I-T department. Also, selecting the wrong form can render your return ‘defective’, which means that your returns will not be taken up for processing, holding up any refund due on excess tax paid during financial year 2024–25 (assessment year 2025–26).
Erroneous bank account details
Errors in entering the bank account details to which refunds have to be credited is one of the common causes for tax refunds being stuck. According to the I-T department, your refund processing may not go through if your bank is not pre-validated. This step is mandatory and you must complete it before filing your returns.
Also read: Decoding crypto taxes in India: A guide to ITR forms, airdrops, NFTs, TDS and business income
Bank account-PAN data mismatch
A refund request may be rejected or delayed if the name on your bank account significantly differs from the name as per PAN records as well, especially in the case of joint accounts or where there are spelling variations.
If you have erroneously mentioned an invalid IFSC code for your bank account or have already closed the bank account selected for refund, the credit could get stalled.
Adjustments against tax dues
Also, your tax refund could be partially adjusted against taxes due, if any. In such cases, your refund amount and clearance date will be mentioned, but the status will read as: ‘Processed and partially refund adjusted’. Then, there is a possibility that the entire refund amount that you had claimed could be adjusted against tax dues. In such cases, this update will be displayed: ‘(return) Processed and full amount adjusted’.
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