Income Tax Refund Delays: Know the Reasons of Delay, Interest Rules and How To Check Status

Mumbai, January 12: As taxpayers move into the early months of 2026, many individuals who filed their Income Tax returns for the 2024-25 financial year (Assessment Year 2025–26) are reporting delays in receiving their income tax refunds. While the wait has caused concern for some, experts note that the Income Tax Department is legally permitted to process these returns until December 31, 2026.

Current delays are often attributed to a combination of stricter automated security checks, the Central Board of Direct Taxes (CBDT) "Nudge" campaign, and common clerical errors in taxpayer filings. Income Tax Refund Delays for AY 2025-26: Why Taxpayers Are Still Waiting and What You Can Do.

The processing timeline remains within standard regulatory windows, but the volume of high-value refund claims has triggered more intensive validation protocols. Under Section 143(1) of the Income Tax Act, the department utilizes automated systems to verify claims, and any significant discrepancy or large refund amount can lead to a longer verification period.

Furthermore, the CBDT’s ongoing "Nudge" initiative, launched in late 2025, has slowed the process for many by issuing SMS and email alerts to taxpayers whose returns show inconsistencies, holding refunds until the taxpayer provides a clarification or files a revised return. Income Tax Refund Status: Why Your Money is Delayed and How to Track It in 2026.

Income Tax Refund Delays: Know Reasons

One of the most frequent reasons for a stalled refund is a data mismatch. Discrepancies between the income declared by the taxpayer and the figures reflected in Form 26AS, the Annual Information Statement (AIS), or the Taxpayer Information Summary (TIS) often halt the automated approval process.

Technical issues also play a significant role. Incorrect bank account details or a failure to pre-validate the bank account on the e-filing portal can prevent the successful credit of funds. Additionally, taxpayers who have not completed their PAN-Aadhaar linkage may face processing roadblocks, as the department requires these identifiers to be synchronized for identity verification.

Income Tax Refund Delays: Outstanding Dues and Interest Rules

Under Section 245 of the Income Tax Act, the department has the authority to adjust a current refund against any outstanding tax demands from previous years. If a taxpayer has unresolved tax liabilities, the refund may be withheld or partially diverted to settle those debts.

To compensate for legitimate delays, the department provides interest on refunds under Section 244A. Taxpayers are generally entitled to interest at a rate of 0.5% per month (or part of a month) if the refund is delayed beyond the statutory period, provided the delay is not attributable to the taxpayer’s own errors or omissions.

Income Tax Refund Delays: How to Check Refund Status

Taxpayers waiting for their funds are advised to regularly monitor their status through the official e-filing portal. By navigating to the ‘View Filed Returns’ or ‘Refund Status’ sections, individuals can see if their return has been processed or if a notice has been issued.

If a refund has been authorised but not received, it may be due to an expired ECS mandate or a bank rejection. In such cases, taxpayers can submit a "Refund Re-issue Request" via the portal. Ensuring that the primary bank account is pre-validated and matches the name on the PAN card remains the most effective way to expedite the final credit.

(The above story first appeared on LatestLY on Jan 12, 2026 07:56 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).