Many taxpayer who filed their Income Tax Return are still not yet received the refund. Those who are waiting they ask only two important question:
- When will the ITR Processed?
- Why refund not issued?
Main Reasons for Delay in ITR Processing
Total Number of Pending ITRs
Currently, more than 1 crore ITRs are still pending for processing on the IT portal. Most of the returns have not even been verified yet, while others are verified but still not processed. This backlog is a major cause for the delay in processing and issuing refunds.
Scrutiny of Old Tax Regime Claims
Taxpayers who opted for the old tax regime for the FY 2024-25 are now being thoroughly scrutinized by the government as this regime allows various deductions and exemptions. This is because IT department previously observed many cases of fake deduction claims
The ITR forms for the FY 24-25 were changed, now it requires a detailed breakup of deductions to facilitate cross-verification.
Specific details requested for verification include policy numbers or document identification number, PAN, Aadhaar, UDID acknowledgment numbers, and detailed bank information for loans.
The department cross-verifies this data with third parties; until verification replies are received, the ITR processing will be delayed
Fake or Incorrect Allowances Claims
Many salaried individuals choose old tax regimes to claim fake deductions or exemptions to reduce taxable income and receive refunds.
The government is now stricter as fake claims are being thoroughly checked. This has led to some ITRs being held up and refunds withheld until verification is complete.
Actions Can Be Take
- If claimed excessive percentage of income as deductions or allowances will triggers government scrutiny.
- Claiming fake deductions or allowances can result in a penalty of up to 200%.
Wrong Income Reporting and Defective Returns
Some taxpayers claim TDS refund without reporting the full associated income, often seen with winning income.
For example, TDS claiming on an income of Rs.87,000 but showing only Rs.37,000 as income to maximize the refund. Such cases may lead to defective notices, refund delays and possible penalties if corrected forms are not submitted timely.
Scrutiny Based on Previous Year's Mistakes
Taxpayers who claimed fake deduction claims in previous years are now subject to strict individual checking.
For these taxpayers, the verification process is intentionally delayed and the department may demand documentation for all claims, even if the current claims are genuine, until they are properly matched.
Suggested Actions
Check the status of your filed ITR on the Income Tax portal.
- If your ITR processing is pending for an unusually long time, you must cross verify for any errors or fake claims in your filing.
- If you find any mistake, fake deduction or incorrect refund claim in your ITR, you must revised return before 31st December 2025, to avoid higher penalties and interest.
- Keep ready for all necessary documents as in case the department asks for proof.
- If there is no error found, then stay calm - your ITR will be processed eventually.
Conclusion
If your ITR is taking too much time than expected, review your IT Return for any mistakes or incorrect claims. If everything is genuine, then its is best to wait patiently as the authorities prioritize accuracy and verification over speed.
If you notice any errors, file a revised return before 31st December 2025, to avoid penalties and ensure your ITR is processed smoothly.
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