Why many income tax refunds for FY25 are still stuck
What's the story
Many taxpayers are yet to receive their income tax refunds for FY 2024-25 or AY 2025-26. The delay has prompted people to frequently check the income tax portal for updates. Recently, Ravi Agrawal, Chairman of the Central Board of Direct Taxes (CBDT), explained that many ITRs look unusual and the department is thoroughly examining any errors in filing.
Refund issues
Discrepancies causing delays in large refunds
Agrawal noted that 40% more appeals have been settled this year. However, he also said that large refunds may be delayed due to various discrepancies in ITR filing. These could include arithmetical errors, incorrect claims, disallowance of expenditure and deduction claimed beyond the due date, or non-validation of taxpayer's bank account. The ITR verification process is mostly automated.
Processing delays
Larger refunds may take longer to process
Agrawal assured taxpayers that their refunds are not far off and should be released by the end of this month or by December. Sujit Bangar, co-founder and CEO of Taxbuddy.com, explained that sometimes the system flags returns with large refund claims for additional automated checks. These checks take time to clear and refunds are issued in batches as per the department's internal processing cycle.
Portal checks
Taxpayers should check income tax portal for delays
Taxpayers are advised to regularly check the income tax portal for possible reasons behind their ITR delay. This could be due to missing documents, pending bank account validation, or adjustments made against previous years. Bangar also said taxpayers may get a confirmation request under the 'Worklist' tab on the portal, asking them to validate their refund claim's correctness.
Grievance filing
Taxpayers can file grievances on the portal
Taxpayers have the option to file their grievances directly through the income tax portal or contact the centralized processing center (CPC) helpdesk for assistance. This provision is aimed at helping taxpayers resolve any issues related to their ITR refunds. It also ensures that they get timely assistance in case of any discrepancies or delays in receiving their refunds.
Interest entitlement
Taxpayers entitled to interest on delayed returns
Taxpayers are entitled to interest on tax refunds under Section 244A of the Income Tax Act. This provision allows for 0.5% per month (or 6% per annum) on the refund amount, depending on when the return was filed and what type of taxes were paid. However, no interest is payable if the refund is less than 10% of total tax liability determined in such cases.