There’s a high probability that many taxpayers have not received their income tax refund (ITR) filed for the financial year (FY) 2024-25, or assessment year (AY) 2025-26. One must’ve been regularly checking the income tax portal to find any reasons for delay, and yet couldn’t really understand why.
Recently, the chairman of Central Board of Direct Taxes (CBDT), Ravi Agrawal, clarified that many ITRs appear unusual, and that the department is carefully checking any errors in filing. He said 40 percent of more appeals have been settled this year.
While some refunds may get issued earlier, however, large refunds may get delayed due to various discrepancies in the ITR filing, including any arithmetical error, incorrect claim, disallowance of expenditure and deduction claimed beyond the due date, as well as non-validation of taxpayer’s bank account, to cite an example. The ITR verification process is mostly automated.
The good news is that refunds are not very far off. Agrawal said that the remaining refunds should be released by the end of this month or by December.
“Sometimes, the system flags returns with large refund claims for additional automated checks, which take time to clear. Further, refunds are issued in batches as per the department’s internal processing and budgeting cycle, and hence larger refunds may take longer to be released compared to smaller ones,” said Bangar, Founder of Taxbuddy.com.
What taxpayers should do when the ITR is delayed?
It is important for taxpayers to regularly check the income tax portal to find any possible reasons for delay. Perhaps, there may be lapse in submitting documents, validation for bank accounts may be pending, or the adjustment has been made against earlier year, as reasons for the ITR delay.
“Taxpayers may receive a confirmation request under the ‘Worklist’ tab on the income tax portal, asking them to validate the correctness of their refund claim, giving taxpayers an opportunity to revise their return if they have claimed incorrect deductions or credits,” said Bangar.
There’s also a provision for taxpayers to submit their grievances directly through the portal, or contact the centralized processing center (CPC) helpdesk for assistance.
Will I get interest on delayed returns?
Taxpayers are entitled to receive interest on tax refunds under section 244A of the Income Tax Act, which allow 0.5 percent per month (or, 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.
Giving an example, Bangar said, “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. Importantly, no interest is payable if the refund is less than 10 percent of the total tax liability determined.”
However, if taxpayers file a return late from their end exceeding the due date, “Interest is computed only 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,” said Bangar.
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