Income Tax Refund Delay: Many taxpayers who filed their income tax returns (ITRs) for the financial year 2024–25 (assessment year 2025–26) are growing anxious over delays in receiving refunds. This comes
even as the Income Tax Department remains well within the statutory timeline for processing returns and issuing refunds.
For those who have filed ITRs for FY 2024–25, it is important to understand that such delays are not uncommon. Under Section 143(1) of the Income Tax Act, the department is legally permitted to process returns filed for FY 2024–25 up to December 31, 2026.
Why ITR refunds are delayed this time
Refunds may take longer in cases involving high-value claims, as such returns are subjected to additional automated checks and validations. In certain instances, refunds can also be temporarily adjusted or withheld under Section 245(2), which allows the department to set off refunds against outstanding tax demands.
Refunds may also be held back under Section 245(2) of the Income Tax Act, 1961. However, in many cases, delays are not due to systemic issues but arise from simple errors made by taxpayers themselves.
In such situations, the Income Tax Department issues intimations, and taxpayers are required to respond to these communications in order for refunds to be processed.
Abhishek Soni, CEO and co-founder of Tax2win, notes that many salaried individuals have received such intimations. These cases largely involve employees who claimed deductions such as those under Sections 80C, 80D, or HRA in their ITRs but had not declared these to their employers at the time when tax was deducted at source (TDS).
Is the NUDGE campaign responsible?
Another factor contributing to slower refunds is the Central Board of Direct Taxes’ (CBDT) ‘Nudge’ campaign, launched in December 2025. Under this initiative, taxpayers whose returns show discrepancies are proactively informed via SMS and email. They are advised to either accept the variations identified by the Income Tax Department or rectify them by filing a revised or updated return. While the campaign is intended to promote voluntary compliance, refunds linked to such cases are being held back until the taxpayer responds.
What is Undisclosed Foreign Income (UFI)?
Undisclosed Foreign Income (UFI) refers to any foreign-sourced income that has not been reported in a return filed within the timelines specified under Sections 139(1), 139(4), or 139(5) of the Income Tax Act. Undisclosed Foreign Assets (UFA) include any offshore assets—whether directly held or beneficially owned—where the assessee cannot satisfactorily explain the source of acquisition. This covers all types of overseas holdings, including foreign bank accounts, securities, ESOPs or RSUs, foreign insurance products, immovable property abroad, and interests in foreign entities, experts say.
How to check income tax refund status using PAN on the e-filing website
Step 1: Visit the income tax e-filing portal at https://www.incometax.gov.in/iec/foportal/
Step 2: Click on the login button and enter your PAN and password.
Step 3: After logging in, go to the Home Page. From the taskbar, click on e-File → Income Tax Returns → View Filed Returns.
Step 4: A complete timeline of the income tax returns filed by the user will be displayed.
