Know why your income tax refund is getting delayed

One of the primary reasons for delayed income tax refunds is when the filed return is not verified

Income Tax Return Deduction Refund Concept

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It is now a known fact that income tax refunds are quick and fast, thanks to the use of technology by the tax department. It usually takes 4-5 weeks for the refunds to be credited to the account of the taxpayer. However, if you have not received the refunds during this duration, it is likely that there are discrepancies in your income tax return. You should check email for any notification from the IT department regarding the refund.

Let us explore the reasons behind these delays and shed light on the steps taxpayers can take to expedite the process.

 Delayed verification of ITR

One of the primary reasons for delayed income tax refunds is when the filed return is not verified. After filing the return, it is crucial to complete the verification process. The Tax Department only initiates the processing of returns once they have been verified. If you have filed your return but neglected to verify it, the refund issuance process will not commence.

 The filing process is complete only after the verification is done. The Tax Department does not take up the returns for processing if they are not verified. If you have filed the return but not verified the return, the return checking and refund issue process has not started.

 Mismatch

Another common reason for refund delays is the mismatch between the tax amounts claimed in the returns and the information reflected in Form 26AS. Form 26AS is a statement that contains details of taxes deducted on behalf of the taxpayer by various entities. If you have claimed credit for taxes paid, but the figures in Form 26AS do not align with those in your returns, the Tax Department will raise a query.

“Taxpayers should respond to such notices/queries promptly as failure to reply within the prescribed time (usually 15 days) may result in the return being treated as defective. Under the law, this is seen as tax return was never filed that further leads to delaying/ denial of the tax refund,” says Gaurav Makhijani, senior Tax Advisor - Roedl & Partner.

If one has any tax demands for past years as per the records of the Income Tax Department, then the refund is likely to be adjusted against these tax demands.  In such cases, the Tax Department generally sends a communication stating its intention to adjust the refund against the tax demands.

Large refunds

According to experts, claims of large refunds could also be scrutinised by the Tax Department.  Possibly, the Tax Department is considering initiating scrutiny assessment in your case, where the refund due may be kept on hold.

 If your return is selected for scrutiny or assessment, it can result in a delay in receiving the refund. While this can be an arduous process, cooperating with the tax authorities and providing any requested information promptly can help expedite the resolution.

Technical glitches, errors

Though rare, technical glitches or system errors within the Tax Department's processing systems can also lead to delays in refund issuance. These issues may arise due to a variety of reasons, such as system upgrades or maintenance. 

In addition, taxpayers should provide valid bank account details for the credit of refund. 

“The first step is ensuring that bank account details are accurate and consistent. There are many challenges we see at ground level for example, there are many cases where a bank account reflects a middle name while the PAN records does not have middle name (or vice versa), leading to a mismatch that causes the system to deny the refund credit. One must ensure that bank records align with PAN details and that the account is duly validated on the income tax portal,” says Makhijani.

To address these delays, taxpayers can take a proactive approach. Firstly, ensure that you have verified your filed return. This simple step is often overlooked but plays a crucial role in initiating the refund process. Additionally, regularly reviewing Form 26AS and cross-checking it with your return can help identify any discrepancies early on, allowing you to rectify them promptly.

 Maintaining accurate and complete documentation is vital. Keep track of all investments, deductions, and supporting documents, ensuring they are readily available when filing your return. By submitting accurate and complete information, you minimize the chances of your return being subjected to scrutiny or assessment.