Income Tax News: ITR Refund Delays and Scrutiny Worry Taxpayers in AY 2025–26; Experts Explain the Reasons

More than 1.16 crore income tax returns have already been filed for Assessment Year (AY) 2025–26, and 1.09 crore of these have been verified, as per the latest data from the Income Tax Department. But despite this progress, concerns around refund delays and increased scrutiny are troubling taxpayers across the country.

Filing Process Started Late This Year

A key reason for the delay in returns and refunds is the late rollout of ITR utilities this year. Unlike previous years, when the tax filing window opened in early April, ITR-1 and ITR-4 utilities were only released on May 30, and ITR-2 and ITR-3 utilities came out as late as July 11. As a result, taxpayers had less time to file, and the return processing queue also got pushed back, impacting timely refunds.

Adding to the confusion, the utilities for ITR-5, ITR-6, and ITR-7 have still not been released, leaving many corporate and trust entities unable to file returns. Due to this delay, the Central Board of Direct Taxes (CBDT) has extended the ITR filing deadline from July 31 to September 15, 2025 for some categories.

Stricter Rules and Technical Checks Slowing Down Refunds

According to CA (Dr.) Suresh Surana, a tax expert, this year’s return process is more technically intensive and scrutiny-heavy due to recent rule changes. Since July 2023, multiple budget announcements and circulars from the Finance Ministry and CBDT have tightened tax compliance norms.

Some key changes include:

The new tax regime made default.

Enhanced disclosure in ITR forms.

More stringent matching of returns with AIS and Form 26AS data.

Tighter rules for claiming deductions and tax credits.

Dr. Surana notes that data mismatches, excessive refund claims, or missing TDS credits are now being automatically flagged by the system, resulting in delayed refunds or notices for clarification.

Refund Anxiety Among Taxpayers

This high level of scrutiny has led to widespread anxiety. Many taxpayers who filed early and expected quick refunds are still waiting. Others are delaying their filings, unsure whether their return will clear without issue. Experts believe this trend will persist throughout the current fiscal year, as the Income Tax Department shifts its focus from speed to accuracy.

While the government has maintained that all genuine refunds will be processed, the administrative delays and stricter rules are causing frustration among salaried individuals, professionals, and small business owners.

With just over two months left for the new filing deadline, experts advise taxpayers to ensure:

Accurate data entry,

Proper reconciliation of Form 26AS and AIS data,

And avoid claiming inflated deductions.

The current ITR filing landscape may be slower, but it aims to be more transparent and accurate in the long run, according to officials.