NEW DELHI: Receiving an income tax refund is a welcome relief for many individuals. However, delays in getting that much-needed refund can be frustrating. So, 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. Now if you have filed the return but not verified the return, the return checking and refund issue process has not started,” CA Chetan Daga, Founder of AdvantEdge Consulting said.
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. In such cases, the refund is put on hold until the discrepancy is resolved.
“To avoid these delays, it is essential to ensure that all necessary supporting documents, such as investment proofs, are provided accurately and in a timely manner. Any missing or incomplete documentation can lead to a delay in processing the refund. Carefully reviewing and double-checking all documents can help streamline the process,” said CA Atul Goel, partner with Atul Goel & Associates (AGA).
According to Daga, 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,” Goel added.
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.
“It is possible that your return is filed and verified, and refund due is also determined, but the refund is not yet credited to your Bank Account. This situation can arise if the Bank Account information submitted to the Income Tax portal is incorrect or the account has since closed,” Daga explained.
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.
Income tax refund delays can be attributed to various factors, including unverified returns, mismatches with Form 26AS, missing or incomplete documentation, scrutiny or assessment processes, and technical glitches. By understanding these reasons, taxpayers can take proactive measures to expedite the refund process. Timely verification, accurate information alignment, complete documentation, and compliance with tax regulations are essential steps to mitigate refund delays. By proactively addressing these factors, taxpayers can improve their chances of receiving their refunds in a timely manner.