Income-tax refunds for assessment year 2024–25 are taking longer than usual, even for straightforward salary cases. Experts attribute the slowdown to stricter verification protocols, a growing backlog at the Central Board of Direct Taxes (CBDT), and more rigorous data-matching checks.
An tax expert, explains the reasons behind the delays and how taxpayers can improve the chances of a timely refund.
Stricter checks behind the slowdown
The primary reason for slower refunds this year is intensified scrutiny by the CBDT.
According to Mundra, “The key reason behind the slowdown in refund processing for 2024–25 is a significant tightening of checks by the CBDT. High-value refund claims or returns flagged for risk indicators are getting deeper scrutiny before approval.”
Even routine cases are facing delays if the system identifies discrepancies between the income-tax return and data in AIS/Form 26AS. Minor mismatches, such as slight differences in TDS credits or reported income, often trigger manual verification. At the same time, a backlog at the Centralised Processing Centre (CPC) has compounded the delays, with many returns remaining unprocessed even though they were filed on time.
Salary refunds above ₹30,000–₹35,000 are flagged
Many salaried taxpayers who previously received quick refunds are now experiencing delays, particularly if their refund claims exceed ₹30,000–₹35,000.
Mundra explains, “Returns that claim refunds beyond ₹30,000–₹35,000 are often tagged as high-value or red-flagged, even if income is from salary alone.”
These flagged returns undergo additional automated checks, followed by manual review in some cases. The department is being extra cautious where returns include claims for deductions, reimbursements, or allowances that require validation. As a result, even straightforward salary cases are taking longer to process.
NRI and property-related returns face tighter scrutiny
Returns filed by NRIs or those reporting capital gains from property are under particular scrutiny this year. Such cases often involve multiple income streams, foreign transactions, or complex deductions, which can complicate the verification process.
Mundra adds, “If data in the ITR doesn’t match AIS/Form 26AS, or if there are property-related entries, the system may flag the return for manual review. The department has identified a higher incidence of incorrect or inflated claims in such cases, which is why scrutiny is tighter.”
Capital-gains cases, especially those claiming exemptions under sections like 54 or 54F, are more likely to trigger verification, further slowing refund processing.
Steps taxpayers can take to speed up refunds
While the delays are systemic, taxpayers can take proactive measures to reduce the chances of their refund being held up.
- Reconcile AIS/Form 26AS Data: Before filing, ensure that income and TDS credits match exactly with AIS/Form 26AS. Even minor inconsistencies can trigger a review, so careful verification is crucial.
- Verify Bank Account Details: Confirm that bank accounts are pre-validated on the e-filing portal, with correct IFSC codes and account holder names. Errors in bank information are a common reason for refund failures.
- E-Verify Returns Promptly: Processing begins only after e-verification. Delayed or omitted verification can stall the refund process entirely.
- Respond to Notices Quickly: If the tax department requests additional information or a revised return, comply immediately. Many refunds remain pending because revised returns or corrections were not filed.
- Maintain Supporting Documentation: Keep salary slips, TDS certificates, proof of deductions, and statements related to capital gains or property transactions ready. Proper documentation helps smooth the review process if manual verification is triggered.
Source from: https://www.cnbctv18.com/personal-finance/income-tax-return-itr-refunds-why-slower-this-year-ws-l-19788809.htm
