Reasons for Delay in Income Tax Refunds
Timely processing of income tax refunds is important for every taxpayer. However, many individuals face delays even after filing their Income Tax Return (ITR) correctly. Refunds are issued only after the return is verified, processed, and validated. Any mismatch, mistake, or pending action can put the refund on hold.
This guide explains the most common reasons for refund delays and the practical solutions to avoid or fix them.
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Return Not Verified (ITR-V Pending)
Why This Causes a Delay
After filing the ITR, it must be verified through Aadhaar OTP, Net Banking, Digital Signature (DSC), or by sending the signed ITR-V to CPC, Bengaluru.
If verification is pending, the Income Tax Department does not process the return.
How to Fix It
- Complete e-Verification using Aadhaar OTP or net banking for faster processing.
- If sending ITR-V physically, ensure it reaches CPC within 30 days.
- Check the verification status under ‘e-Verify Return’ on the IT portal.
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Bank Account Not Pre-validated or Not Linked With PAN
Why This Causes a Delay
Refunds are credited only to pre-validated and ECS-enabled bank accounts. If your account is not validated or not linked with PAN, the refund cannot be processed.
How to Fix It
- Go to Profile → My Bank Account → Pre-validate Account on the portal.
- Ensure your name, PAN, and bank details match bank records.
- Enable EVC to speed up verification.
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Incorrect Personal or Bank Details in ITR
Why This Causes a Delay
Incorrect PAN, name, Aadhaar, bank account number, or IFSC can lead to refund failure or processing delays.
How to Fix It
- Double-check all personal and bank details while filing.
- Update your profile under Personal Information if needed.
- If the refund failed, raise a Refund Re-issue Request on the portal.
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ITR Filed Under the Wrong Form or Section
Why This Causes a Delay
Choosing an incorrect ITR form or wrong section may lead to errors or hold-ups during processing.
How to Fix It
- Select the correct ITR form based on your sources of income.
- If filed incorrectly, submit a Revised Return using the correct form.
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Outstanding Demand from Previous Years
Why This Causes a Delay
If there is any pending tax demand, the department may adjust your refund (partially or fully).
How to Fix It
- Check the Outstanding Demand section on the portal.
- If the demand is incorrect, submit a Disagree Response with valid reasons.
- If correct, clear the pending tax to allow refund release.
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Return Marked as ‘Defective’ Under Section 139(9)
Why This Causes a Delay
A defective return indicates missing or incorrect information, so processing is paused.
How to Fix It
- Check notices under e-Proceedings.
- Correct the defect and upload the revised return within the due date.
- Refund processing will resume after correction.
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High-Value Transactions Requiring Manual Review
Why This Causes a Delay
Large transactions reported in AIS/TIS—such as high-value deposits, property purchases, or securities transactions—may require additional manual checks.
How to Fix It
- Ensure all high-value transactions are correctly reported in your return.
- If AIS data is incorrect, submit AIS Feedback.
- Keep supporting documents ready in case of queries from the department.
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Mismatch Between Reported Income and AIS/26AS
Why This Causes a Delay
If the income declared in the return does not match details in AIS/26AS, the system flags the ITR for verification.
How to Fix It
- Reconcile all income with AIS/TIS/26AS before filing.
- If any mismatch is found later, file a Revised Return.
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Detailed Scrutiny of Deductions and Exemptions (Old Tax Regime)
Why This Causes a Delay
Under the old tax regime, returns often involve multiple deductions and exemptions—such as 80C, 80D, HRA, LTA, home loan interest, etc.
CPC may perform additional checks to ensure:
- Claims are not unusually high
- Data matches Form 16
- Deductions align with AIS/TIS
- No mismatch exists with employer filings
These additional checks can slow down refund processing.
How to Fix It
- Ensure all deductions are legitimate and supported by documents.
- Cross-check Form 16 with your claims before filing.
- Respond promptly if CPC seeks clarification.
Conclusion
Refund delays usually happen due to verification issues, mismatches in tax data, incorrect details, or additional scrutiny. By ensuring accurate filing, timely verification, and proper reconciliation with AIS/26AS, you can significantly speed up refund processing.
