Many taxpayers across the country are growing anxious as their income tax refunds for AY 2025–26 continue to remain pending, despite filing their Income Tax Returns (ITR) months ago. While the last date for filing returns without penalty was September 16, a large number of taxpayers say that their refunds are still “under processing” with no timeline mentioned on the portal. Meanwhile, several others — especially those with smaller refund amounts — have already received their payouts.
The central question remains: Why is the delay happening this year?
Income Tax: High-Value & Suspicious Deduction Claims Slowing Down Refunds
According to CBDT Chairman Ravi Agrawal, the Income Tax Department is conducting deeper and more detailed scrutiny in cases where unusual, excessive, or suspicious deductions have been claimed. He clarified that many refund requests were automatically flagged by the system as “high-value” or “red-flagged” based on risk parameters.
These flagged returns are undergoing manual and automated verification to ensure no fraudulent claims slip through. As a result, refunds for such taxpayers are taking longer than usual.
Agrawal added that while low-value refunds and straightforward returns are being cleared smoothly, the department detected several cases where deductions claimed did not match the taxpayer’s income profile or TDS records. To prevent revenue loss to the exchequer, additional checks have been implemented.
Refund Slowdown Also Linked to Fewer Claims & Revised TDS Structure
The CBDT Chairman also noted that the overall slowdown in refund numbers may be partly due to the reduction in refund claims this year. With TDS rates rationalised and several minor deductions discontinued, fewer taxpayers are eligible for large refunds.
Recent government data showed that:
- Refund payouts dropped 18% year-on-year
- Over ₹2.42 lakh crore in refunds were issued between April 1 and November 10
This indicates a structural shift: instead of large refunds, taxpayers are paying closer to their accurate tax liability due to improved TDS mechanisms.
WHEN WILL PENDING REFUNDS BE RELEASED?
Officials suggest that refunds for high-value or flagged cases may take a few more weeks, depending on:
- the complexity of claimed deductions
- mismatches between employer-reported TDS and taxpayer declarations
- pending verification or document requests
Tax experts also advise taxpayers to regularly check the ITR portal for any notifications requesting clarification or additional proof.
What Taxpayers Should Do Now
- Verify if any outstanding responses or E-verification steps are pending.
- Ensure that bank account details are validated on the portal.
- Check Form 26AS, AIS, and TIS for mismatches with claimed deductions.
- Avoid claiming deductions without proper documentation, as scrutiny has tightened.
