Why Are Income Tax Refunds Delayed in FY 2024-25? What Taxpayers Must Know

Income tax refund delays have become a significant concern for many taxpayers in India during the financial year 2024-25 (assessment year 2025-26). Despite the Income Tax Department's efforts to process returns promptly, numerous individuals are experiencing longer waiting periods, especially for larger refund amounts.

Typically, income tax refunds are processed within 4-5 weeks after filing the Income Tax Return (ITR). However, this timeline has been stretched in recent months due to various operational factors and compliance-related challenges.

One primary reason for the slowdown is the late rollout of ITR forms this year. Several forms that were available early in the previous year were issued only months later in 2024. This delay pushed back the entire filing calendar, compressing the processing window and creating cascading delays for returns needing additional scrutiny.

Moreover, tighter verification rules and processing bottlenecks at the Centralised Processing Centre (CPC) in Bengaluru have exacerbated the issues. While refunds involving smaller claim amounts are being cleared comparatively faster, high-value refunds above ₹30,000 are often subjected to enhanced scrutiny, causing a backlog. Official data shows a steep 38% drop in refund payouts for the current year, with refunds issued up to early November totaling around ₹88,548 crore, down from ₹1.42 lakh crore in the same period last year.

Another significant contributor to delays is common taxpayer errors, such as:

• Filing errors or choosing the wrong ITR form
• Incorrect or inactive bank account details supplied
• Mismatches in Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) data
• Failing to e-verify the return
• Claiming deductions flagged as ineligible by the system

Such discrepancies often result in refund hold-ups until they are rectified. Taxpayers can check their refund status through the Income Tax portal, NSDL portal, or TRACES platform, and if their refund is unduly delayed, they have the option to raise a grievance on the income tax portal.

In light of the delays, the Income Tax Department has extended deadlines related to filing and audit reports to accommodate taxpayers. For example, the due date for filing ITRs has been extended from October 31 to December 10, 2025, for certain assessees.

Experts advise taxpayers to carefully verify all details before submitting returns and ensure timely e-verification to avoid processing delays. Despite frustrations, refunds are processed once verification and any discrepancies are resolved.

For those who missed filing by the standard deadlines, it is still possible to file belated returns by December 31, 2025, to claim refunds.