Highlights

• Income tax refunds for AY 2025–26 are delayed beyond five months mainly due to intensified verification checks and mismatches flagged through Form 26AS, AIS and TIS, with many cases paused after Section 143(1) intimations.
• Refunds are released only after complete validation, and common filing errors, high-value transactions or data discrepancies often trigger adjustments or clarification requests that slow processing.
• Taxpayers must regularly check the e-filing portal for pending actions, respond to notices within deadlines and ensure bank and past demand details are correct to avoid further delays and penalties.

Taxpayers across India report waits to exceed five months for income tax refunds filed under AY 2025-26, with social media complaints highlighting cases stuck in processing. The Income Tax Department attributes delay to rigorous checks, including mismatches flagged via Form 26AS, AIS and TIS. Notices under Section 143(1) have issued to many, pausing payouts amid intensified compliance measures.

Why Refunds Face Processing Holds

Refunds process only after full return validation, yet common errors persist. Taxpayers often file without verifying, rendering submissions incomplete. This year, cross-checks against financial data from banks, employers and investments detect discrepancies early. Section 143(1) intimations detail adjustments for arithmetic issues, disallowed claims or TDS variances. High-value transactions or foreign income may prompt clarification requests under expanded "nudges."

Steps Taxpayers Must Take

Log into the e-filing portal to view "Pending Actions" or "e-Proceedings" for notices. Download intimation, compare against filed ITR, Form 26AS and AIS, then accept or respond with documents. Track refund status separately; if "issued" but uncredited, verify bank details and reference number. Address demands from past years promptly to avoid adjustments. Respond to all notices within deadlines to prevent escalation to penalties or reassessment.

Interest and Legal Angles

The Income Tax Act mandates 0.5% monthly interest on delays attributable to the department, calculated from one year post-filing end-date. Taxpayer-caused holds qualify differently. Legal routes exist for unprocessed returns via writ petitions, though experts advise exhausting portal remedies first. Peak-season backlogs amplify waits, but automated systems aim to curb incorrect payouts.