The last date to file income tax returns in assessment year 2025-26 for individuals not requiring an audit was September 15, 2025, which was extended from the original deadline of July 31, 2025. Nearly six months have passed since the due date, and many taxpayers are still awaiting the processing of their refunds.
Refund processing by the tax department begins only after the return is e-verified by the taxpayer. Usually, it takes 4-5 weeks for the refund to be credited to the account of the taxpayer, according to I-T department’s website.
The income tax department is still within its statutory timeline to process returns and issue refunds.
Under Section 143 (1), an intimation is required to be issued by the income tax department within 9 months from the end of the financial yearn which the return is furnished by the taxpayer, according to the tax department’s website.
Why your income tax refund may be delayed?
Most refund delays are usually due to a data mismatch between a taxpayer’s return and the government’s records, like the AIS or Form 26AS, said Ritika Nayyar, Partner at Singhania & Co.
“If your reported income or TDS claims don’t perfectly align with what your bank or employer reported, the system flags it for a manual check as part of the automated “Nudge” campaign, often pausing everything until you confirm the details or file a revised return,” she explained.
Nayyar also pointed to technical issues as a possible reason for delays. For instance, the refund timeline can be impacted if an individual’s bank account is not pre-validated or if the name on your Permanent Account Number (PAN) does not exactly match the bank’s records.
In some cases the I-T department may also hold back the refund to adjust them against tax demands from earlier assessment years or take extra time to scrutinise complex claims, such as disclosure of foreign assets or high-value deductions, Nayyar said.
From a real estate perspective, scrutiny can also be triggered due to errors in calculating long-term or short-term capital gains on the sale of properties, said Siddharth Maurya, Founder and Managing Director of Vibhvangal Anukulakara Private Limited.
Mistakes in claiming indexation benefits, erroneous reporting of reinvestment exemptions under Sections 54 or 54F, and under-claiming the home loan interest deduction under Section 24(b) can also frequently trigger scrutiny, he said.
“Also, in the case of several owners of the same property, incorrect partition of income or capital gain between the owners may cause delays in the refund process,” Maurya further added.
What happens if the refund is delayed beyond the mandated window?
If your ITR is delayed beyond the prescribed timeline, and it is attributable to the tax department and not the taxpayer, then interest is payable under Section 244A, according to Sonu Iyer, Partner and National leader, People Advisory Services of tax at EY India.
Interest rate is calculated at 0.5% per month (6% per annum):
- If a return is filed on time, interest is calculated from April 1 of the assessment year, until the refund is received.
- If the return is filed late, then interest is calculated from the date of filing, and it must have been reported as taxable “income from other sources” in your next return.
In short, the start date depends on the type of excess tax paid.
Which filings are more prone to delays?
According to Suraj Singh, Founder of S D Singh & Associates, Chartered Accountants, there are some categories which may face delays due to higher scrutiny risks and mismatches. These categories include:
• High-value transactions, such as property deals, large capital gains, or foreign remittances.
• Freelancers and professionals with inconsistencies between presumptive and actual income reporting
• Cases involving foreign assets or income, reported under Schedule FA
• High-value refund claims, especially where large TDS credits are claimed relative to reported income
• Loss returns or carry-forward claims, particularly involving capital losses
• Returns claiming multiple or unusually high deductions
Union Budget 2026 extended the deadlines for ITR-3 and ITR-4, which applies to non-audit taxpayers to 31 August from the end of the relevant tax year. However, the deadline for ITR-1 and ITR-2 remains 31 July of the relevant tax year.
