Income Tax Refunds in India, like in many other countries, can sometimes experience delays for a variety of reasons.
There are several complexities and considerations that may lead to non processing of the Income Tax Refund Here are a few reasons why income tax processing and refunds could get delayed:
Errors while filing the Income Tax Returns:
Mistakes or discrepancies in the filed tax returns can lead to delays. If there are errors in the data shared in the Income Tax Return, the income tax department may require additional time to verify and often may have to raise the issues. Some of the common mistakes that may occur while filing the Income Tax return are:
- Mismatch between Income declared vs as in AIS;
- Mismatch in TDS Credit claimed;
- Not declaring certain transactions as Sale of House Property;
Manual Verification:
Though all the return processing are online now a days, in cases where the tax return raises suspicions or requires further verification, tax authorities may forward the case to Jurisdictional assessing officer to conduct a manual review. This process can be time-consuming and can result in delays.
Increased Workload:
During peak tax filing seasons, the income tax department receives a large number of returns for processing. This increased workload can cause delays as the department struggles to manage the high volume of returns. Despite the fact that Income Tax Department has increased the IT infrastructure yet due to huge volume of the returns filed, processing of certain returns may take time longer than usual.
Reassessment or Scrutiny:
Some tax returns may be selected for detailed scrutiny or assessment due to certain criteria, such as high-value transactions, business income, or potential tax evasion. This process can take longer to complete and may result in delayed refunds.
However it may be noted that for every refund delayed, it may not be case that the return has been selected for scrutiny.
Please note that the last date by which the return can be selected for scrutiny is three months after the end of the financial year in which the return has been filed. To avoid any interest to be paid to the assessee due to delay in processing the refund, department usually ensures to process the refund while the scrutiny notice can be served later.
Technical Glitches in IT infrastructure:
Sometimes, technical issues in the income tax department’s systems or online portals can cause delays in processing returns and issuing refunds.
Refund Bank Processing:
Once the income tax department processes the refund, it needs to be transferred to your bank account. Delays can occur if there are issues with the bank’s processing or if there is incorrect bank account information provided in the tax return.
For expeditious refund, before filing of Income Tax Return, do ensure that the Bank Verification as appears in your profile in Income Tax site appears to be completed. In event of this not being complete, may contact your banker to complete the same.
If your income tax refund in India gets delayed, there are several steps you can take to inquire about the delay and seek remedies:
Check Refund Status Online:
The Income Tax Department provides updated information in the Tax Portal where you can track the status of your refund using your Permanent Account Number (PAN) and the login password. This portal will provide you with information about the current status of your refund and any updates on its processing.
Lodge Grievance with Income Tax Department:
If you notice a significant delay in your refund, you can lodge grievance with the Income Tax Department, contact helpline to inquire about the reasons for the delay.
It may be added here that usually the helpline gives customary replies that are general in nature, often some tangible information is provided.
Contact your Chartered Accountant to help you check if there are issues that need to be addressed by you. In case, you are not able to resolve the issue of non receipt of refund, feel free to mail the issue to us.
Remember that while pursuing remedies for a delayed income tax refund, it’s important to maintain proper documentation of all your communications, transactions, and interactions with the tax authorities. This documentation can be helpful in case you need to escalate the matter further or provide evidence of your efforts to resolve the issue.