New Delhi: The date December 31, 2025 is very important for income tax return (ITR) processing and refunds. After this date, taxpayers will no longer be allowed to file a revised return voluntarily. Despite
this approaching deadline, a large number of returns are still pending with the Income Tax Department.
As of December 28, around 8.5 crore income tax returns had been filed and verified. Out of these, nearly 7.8 crore returns have already been processed. However, more than 70 lakh returns are still pending at the Centralised Processing Centre (CPC). Many of these delays are due to refund claims and data mismatches.
Why are refunds getting delayed?
In several cases, the delay in processing is happening because of mismatches in income or deductions. Common reasons include differences between Form 16 and the ITR, incorrect deduction claims, or entries related to political donations.
Experts say that when a refund is claimed and a mismatch is found, the refund may be put on hold until the issue is resolved. This is why taxpayers are being advised to act before the December 31 deadline.
What happens after December 31?
After December 31, taxpayers will lose the option to revise their return on their own, even if the return is still pending for processing. Any correction after this date will follow a formal process and may take more time and effort.
If mistakes are found later, taxpayers may have to file an updated return (ITR-U) under Section 139(8A). This can be done up to four years, but it comes with higher costs. Additional tax payable is 25 percent in the first year, 50 percent in the second, 60 percent in the third, and 70 percent in the fourth year, along with interest.
Risk of penalty and tax demand
Once the return is processed, if the department confirms a mismatch, a tax demand can be raised under Section 143(1). In serious cases of misreporting, a penalty ranging from 50 percent to 200 percent can be imposed under Section 270A.
Refund interest provision
A pending return does not mean the refund is cancelled. If there is a delay, taxpayers are eligible to receive interest at 0.5 percent per month, or 6 percent per year, on the refund amount.
