Income Tax Refund Delays: The Income Tax Department did not extend the Income Tax Return (ITR) deadline for the Assessment Year 2024-25, despite calls from tax professionals and individual taxpayers to push the timeline beyond July 31. Interestingly, many taxpayers who filed their returns at the eleventh hour of the deadline saw their returns processed faster and received their tax refunds promptly. Meanwhile, some taxpayers who filed tax return much earlier are still waiting for their refunds. In some cases, refunds were issued within 24 hours of filing, while others have been waiting for over a month for the tax department to process their refunds.

Many of you who have not yet received your income tax refunds might be wondering why your returns haven’t been processed, despite filing well in advance of the deadline. While the Income Tax Department typically issues refunds within a specific timeframe, several factors can cause delays. Understanding these reasons and knowing how long the department can legally take to issue refunds may help ease some of the frustration.

Probable reasons why your ITR refunds have not been issued:

One of the factors contributing to delays in ITR processing is the type of ITR form you have chosen to file your income tax returns.

“Simpler forms like ITR-1 or ITR-4 are usually processed faster compared to ITR-2 or ITR-3,” Akhil Chandna, Partner, Grant Thornton Bharat, said.

Also, returns that involve larger refund claims may be subjected to more rigorous checks and balances by the tax authorities, according to him.

“Discrepancies in the data provided in the tax return, such as mismatches in reported income or tax credits may require re-verification by taxpayer post communication from the tax department,” Chandna explained as the third possible reason for the delay in ITR processing and refund of tax.

Understanding these factors can help taxpayers manage their expectations and be better prepared for any potential delays in receiving their refunds, he added.

Statutory timeline for processing of ITRs for AY 2024-25

The statutory timeline for processing of ITRs for AY 2024-25 is 31 December 2025. However, with the technological advancements in recent years, the processing of tax returns has got faster.

Will you get any interest on your delayed tax refunds?

When an income-tax return is filed within the prescribed due date, the taxpayer is entitled to interest at 0.5% per month or part of a month, calculated from April 1, 2024, until the date of the refund. If there is a delay in filing the return, interest is payable from the date the ITR is furnished to the date of the refund. However, no interest is payable by the Income Tax Department if the refund amount due is less than 10% of the actual income tax liability.