<p>Recently, three tax refund-related issues made headlines. One was about income refunds surging 474%, from Rs. 83,008 crore in FY14 to Rs. 4.77 lakh crore in FY25. Second was on the tax department’s nationwide crackdown on fake refund claims. The thor was about he Select Committee on Income Tax Bill, 2025, recommending that tax refund claims not be tied to a due date. The CBDT’s Central Action Plan for 2025-26 stresses on prompt issuance of refunds to avoid interest payments for delayed refunds. However, large-scale misuse of deduction and exemption provisions has triggered a stringent scrutiny of claims, delaying refunds even in genuine cases. </p><p><strong>Delay in releasing new ITR forms</strong></p><p>The excel utilities of the widely used ITR 1 and ITR 4 were released on May 30, more complicated ITR-2 and ITR-3 were released on July 11, and online filing of ITR 2 was enabled on July 18. The department’s unexpected delays this year are causing not only the tax filing exercise itself to extend beyond July (the due date has been extended until September 15) but also the processing of filed returns and thereafter refunds. </p><p><strong>Major changes in the new ITR Forms</strong></p><p>Unlike earlier, this year’s ITR forms required a taxpayer to divulge more details. For instance, to claim HRA – in addition to basic salary and dearness allowance, place of work, nature of work the tax payer has to furnish actual HRA received and actual rent paid. Likewise, to claim housing and education loan deductions – name of the lender / banker, loan account number, date of loan sanction, total loan amount, loan outstanding as of March 31, have to be shared. To claim health/life insurance deductions – name of the insurance company and policy number have to provided. These details are likely to be verified in the background and processed the tax refunds, if eligible. </p>.Raise benchmark, earn taxpayer trust: Sitharaman to Income Tax officers.<p><strong>Flagged for scrutiny</strong></p><p>In certain cases, high-risk returns will be flagged for greater scrutiny and compared to their accuracy/authenticity with data already available with the department and what the taxpayer disclosed in the return. In those cases, refunds will be withheld until the scrutiny process is completed.</p><p><strong>Pending past tax demands</strong></p><p>Where there are outstanding demand(s) from earlier years, and a refund was claimed in the current assessment year’s return, the jurisdictional assessing officer should first adjust that refund or a part of the refund against the earlier tax demands by issuing a prior notice to the concerned taxpayer.</p><p><strong>General issues</strong></p><p>Beyond these factors, other hitches in the refund process could come from discrepancies among the filed return, form 16 and form 26AS, failure to e-verify his/her filed return within 30 days of the filing or sending duly signed acknowledgment to CPC-Bengaluru by an ordinary post, inaccurate bank account name and number, absence of pre-validated bank account for refund, not updating taxpayer’s profiles on regular basis with active e-mail id and mobile number, and filing returns offline instead online.</p><p><strong>How to address undue delays</strong></p><p>A taxpayer is expected to wait for four to six weeks for the processing of the filed return. From there, another ten to fifteen days for crediting the refund to the given bank account. Meanwhile, duty rests on the taxpayers to check their registered e-mail id and mobile number for emails and ordinary sms for department-related communications. Upon receipt, they should respond to those queries/clarifications within the given timeframe online. In the case of non-receipt of any such communications and undue delays, the taxpayer should check the status at https://tinyurl.com/yrr997kc using the ‘Know your Refund Status’ function. A taxpayer can raise a ticket by logging in to the above portal using the ‘grievance’ function or the CPGRAMS portal at https://tinyurl.com/mr3dhb8e .</p>
<p>Recently, three tax refund-related issues made headlines. One was about income refunds surging 474%, from Rs. 83,008 crore in FY14 to Rs. 4.77 lakh crore in FY25. Second was on the tax department’s nationwide crackdown on fake refund claims. The thor was about he Select Committee on Income Tax Bill, 2025, recommending that tax refund claims not be tied to a due date. The CBDT’s Central Action Plan for 2025-26 stresses on prompt issuance of refunds to avoid interest payments for delayed refunds. However, large-scale misuse of deduction and exemption provisions has triggered a stringent scrutiny of claims, delaying refunds even in genuine cases. </p><p><strong>Delay in releasing new ITR forms</strong></p><p>The excel utilities of the widely used ITR 1 and ITR 4 were released on May 30, more complicated ITR-2 and ITR-3 were released on July 11, and online filing of ITR 2 was enabled on July 18. The department’s unexpected delays this year are causing not only the tax filing exercise itself to extend beyond July (the due date has been extended until September 15) but also the processing of filed returns and thereafter refunds. </p><p><strong>Major changes in the new ITR Forms</strong></p><p>Unlike earlier, this year’s ITR forms required a taxpayer to divulge more details. For instance, to claim HRA – in addition to basic salary and dearness allowance, place of work, nature of work the tax payer has to furnish actual HRA received and actual rent paid. Likewise, to claim housing and education loan deductions – name of the lender / banker, loan account number, date of loan sanction, total loan amount, loan outstanding as of March 31, have to be shared. To claim health/life insurance deductions – name of the insurance company and policy number have to provided. These details are likely to be verified in the background and processed the tax refunds, if eligible. </p>.Raise benchmark, earn taxpayer trust: Sitharaman to Income Tax officers.<p><strong>Flagged for scrutiny</strong></p><p>In certain cases, high-risk returns will be flagged for greater scrutiny and compared to their accuracy/authenticity with data already available with the department and what the taxpayer disclosed in the return. In those cases, refunds will be withheld until the scrutiny process is completed.</p><p><strong>Pending past tax demands</strong></p><p>Where there are outstanding demand(s) from earlier years, and a refund was claimed in the current assessment year’s return, the jurisdictional assessing officer should first adjust that refund or a part of the refund against the earlier tax demands by issuing a prior notice to the concerned taxpayer.</p><p><strong>General issues</strong></p><p>Beyond these factors, other hitches in the refund process could come from discrepancies among the filed return, form 16 and form 26AS, failure to e-verify his/her filed return within 30 days of the filing or sending duly signed acknowledgment to CPC-Bengaluru by an ordinary post, inaccurate bank account name and number, absence of pre-validated bank account for refund, not updating taxpayer’s profiles on regular basis with active e-mail id and mobile number, and filing returns offline instead online.</p><p><strong>How to address undue delays</strong></p><p>A taxpayer is expected to wait for four to six weeks for the processing of the filed return. From there, another ten to fifteen days for crediting the refund to the given bank account. Meanwhile, duty rests on the taxpayers to check their registered e-mail id and mobile number for emails and ordinary sms for department-related communications. Upon receipt, they should respond to those queries/clarifications within the given timeframe online. In the case of non-receipt of any such communications and undue delays, the taxpayer should check the status at https://tinyurl.com/yrr997kc using the ‘Know your Refund Status’ function. A taxpayer can raise a ticket by logging in to the above portal using the ‘grievance’ function or the CPGRAMS portal at https://tinyurl.com/mr3dhb8e .</p>