Actual Reasons Behind ITR Refund Delay: When Will You Get Your Money?

Understanding the Delays in Income Tax Return (ITR) Refunds in 2025

Many taxpayers in India are facing extended delays in receiving their Income Tax Refunds post filing their Income Tax Returns (ITR) for the financial year 2024-25. Despite timely filing, refunds are getting stuck due to stricter government scrutiny, data mismatches, and technical challenges. This blog unpacks the core reasons behind these delays and what taxpayers can do to ensure smoother processing.

Why Are ITR Refunds Delayed in 2025?

The Income Tax Department is conducting more rigorous verification and scrutiny of tax returns, especially under the old tax regime which allows various deductions and exemptions. The main causes for refund delays include:

• Huge Backlog of Pending Returns: Over 1 crore ITRs remain unprocessed or pending verification, creating a massive bottleneck.
• Strict Scrutiny of Old Tax Regime Claims: Taxpayers opting for the old regime face detailed checks due to prior occurrences of fake or inflated deduction claims. The ITR forms now require itemized breakdowns facilitating cross-verification.
• Fake or Incorrect Allowances and Deductions: Many salaried individuals claim excessive or falsified exemptions which are now being intensely examined, resulting in delays or penalties up to 200% for false claims.
• Incorrect Income Reporting and Defective Returns: Cases where taxpayers claim TDS refunds without accurately reporting income (e.g., declaring lower income than actual) are flagged and may result in defective return notices and refund holds.
• Strict Verification Based on Past Compliance History: Taxpayers with a history of incorrect claims face prolonged individual scrutiny, delaying current year refunds.

Technical and Data-Related Challenges Contributing to the Delay

In addition to governance and compliance checks, the refund process is slowed by non-technical reasons such as:

• Data Mismatches: Discrepancies between income details in ITR and government records like Form 26AS, Annual Information Statement (AIS), or tax credits result in returns being sent for manual verification.
• Bank Account and PAN Validation Issues: Refunds are delayed if the bank account is not pre-validated, the account name does not match PAN details, invalid IFSC codes are used, or accounts mentioned have been closed.
• Late E-Verification: Returns not e-verified within 30 days become invalid for refund processing until verification is completed.
• Portal Bottlenecks and Utility Delays: Late rollout of updated ITR utilities (like ITR-2, ITR-3), peak filing season overloads on the e-filing portal, and technical glitches at processing centers amplify the delay.

What Can Taxpayers Do to Expedite Their Refund?

While some delay is inevitable due to enhanced scrutiny, taxpayers can take proactive steps to minimize issues:

• Ensure accurate, complete, and truthful disclosure of income, deductions & exemptions in the ITR.
• e-Verify the return promptly within 30 days of filing to keep the return valid for processing.
• Pre-validate bank account details on the income tax portal, ensuring the name exactly matches PAN records and the IFSC code is correct.
• Keep an eye on the income tax portal for refund status updates or notices and respond quickly to any discrepancy communications.
• If the refund is delayed post-processing, submit a Refund Reissue Request or escalate the issue through channels like the Centralized Processing Centre (CPC) or the e-Nivaran grievance portal.
• Check past year returns for mistakes which might be delaying current refunds and file a revised return by the due date if needed.

It is important to remember that while waiting can be frustrating, the government’s priority remains on accuracy and verification over speed to curb fraudulent claims and protect taxpayer interests.