Income tax refunds for many taxpayers may get delayed this year, primarily due to late release of ITR utilities and backend system upgrades on the Income Tax Department’s portal. Though the return filing deadline for non-audit cases has already been extended to September 15, 2025, concerns are now shifting toward the timeline for refund issuance.
What’s causing the delay?
As of July 4, 2025, the ITR-2 and ITR-3 utilities are still not live on the income tax e-filing portal. These forms are commonly used by individuals with capital gains, multiple income sources, or business/professional income.
Their delayed release pushes back the entire refund process for those categories of taxpayers.
“The delay is mainly due to significant structural changes in the forms following the Finance Act, 2024, and ongoing technical upgrades to the backend systems,” an tax expert said.
He added that the e-filing site is currently not displaying updated data on return processing or refunds, which adds to the uncertainty.
“The delay in releasing ITR-2 and ITR-3 utilities, coupled with the lack of published data, is likely to result in a delay in processing and issuance of refunds for the current assessment year,” he noted.
“Any delay in the release of utilities translates to delayed refund payments,” another tax expert added. “This creates a cascading effect on taxpayers’ financial planning.”
While taxpayers who overpaid more than 110% of their actual tax liability are eligible to receive interest at 0.5% per month, those who paid between 100% and 110% get no compensation—a gap that experts say is unfair.
In addition, the interest earned on refunds is taxable as “income from other sources,” which further reduces the actual benefit received by taxpayers. “The interest rate on refunds is disappointingly low and fails to match even prevailing fixed deposit rates,” he added.
What should taxpayers do?
Tax experts advise taxpayers to stay alert for the release of the ITR-2 and ITR-3 forms and file their returns promptly once available. Timely e-verification and accurate information are key to avoiding further delays.
Even though there is no official word yet on refund delays, the current state of utilities and backend updates signals that refunds may not arrive as swiftly as in previous years—especially for those filing through ITR-2 and ITR-3.
