Income Tax Refund Delay: What You Need To Do?

Income tax refunds are granted after the income tax returns (ITR) are processed by the Income Tax Department (ITD). As per Section 143(1), the department is required to process ITRs within nine months from the end of the financial year in which the return was filed. However, the department often processes returns much faster, sometimes within a day.

Why Income Tax Refunds May Be Delayed

“The main factor contributing to refund delays is the processing of the ITR. ITR processing time varies based on factors such as the form used (ITR-1 is processed quicker than ITR-3) and the complexity of the return. Therefore, refunds claimed in ITR-1 may be issued sooner, as ITR-1 is more likely to be processed faster compared to other ITR forms,” says Rahul Singh, senior manager, Taxmann, tax and corporate advisor.

Besides this, delays in refunds may occur if your bank account is not pre-validated on the e-filing portal. The ITD mandates that taxpayers pre-validate their bank accounts on the e-filing portal to enable direct crediting of tax refunds. “If the bank account is not pre-validated, you will not get the refund even after processing of ITR,” says Singh.

What To Do

If the refund has not reached you yet, you need to do the following

Wrong Bank Account Number Or IFSC Code. Make sure to double-check the bank account number and IFSC code you entered when filing your tax return or requesting a refund.

The Bank Account Is Closed. If the bank account you provided is closed, the refund will be returned to the ITD. You will need to contact the ITD to re-issue the refund to a different account.

An Incorrect Name On The Bank Account. The name on the bank account must match the name on the tax return exactly. If the names do not match, the refund will be returned to the ITD. If this is the reason, it needs to be rectified.

Fraudulent Activity. “In rare cases, refunds may be delayed or denied due to fraudulent activity. If you believe that your refund has been delayed or denied due to fraud, you should contact the ITD immediately,” says Sanjiv Bajaj, Jt. Chairman & MD, BajajCapital.

Processing Delay. The ITD is currently experiencing a high volume of refund requests, which may cause some delays. If you have filed your tax return and requested a refund within the past few weeks, it is possible that your refund is still being processed. You can check the status of your refund on the ITD website.

If your refund has not reached you due to a mismatch of account numbers, you can take the following steps to rectify the situation:

Check the bank account number and IFSC code you provided when filing your tax return. Make sure that the numbers are correct and that they match the account number and IFSC code of your bank account.

Contact your bank to verify that the account is still active and that there are no holds on the account.

Contact the ITD to request a refund re-issue. “When you contact the ITD, you will need to provide them with your PAN (Permanent Account Number), the assessment year, and the amount of the refund. You can contact the ITD by phone, mail, or through their e-filing portal,” says Bajaj.

Here are the steps on how to request a refund reissue through the ITD e-filing portal:

• Go to the ITD e-filing portal and log in to your account.

• Click on the "My Account" tab.

• Click on the "Service Request" link.

• Select the "Request Type" as "New Request" and Select the "Request Category" as "Refund Reissue".

• Enter the required information, such as your PAN, assessment year, and the amount of the refund.

• E-verify your identity.

• Submit your request.

• The ITD will review your request and will issue the refund to the correct account as soon as possible.