Why Your Income Tax Refund Is Delayed for FY 2024–25: Explained with Rules & Deadlines

Many taxpayers who have filed their income tax returns (ITRs) for FY 2024–25 (AY 2025–26) are still waiting to receive their tax refunds due to various delays. However, taxpayers should understand that refund delays are quite common and usually do not mean there is any issue with the filed return.

The Income Tax Department has time to process returns and issue refunds until 31 December 2026. This means the department is still within the allowed time limit to process ITRs filed for FY 2024–25, and the delay does not indicate any problem.

According to the Income Tax portal, as of now, there are 13.67 crore registered users. Out of these, 8.82 crore income tax returns (ITRs) have been filed and 8.69 crore ITRs have been verified. From the verified returns, about 8.17 crore ITRs have already been processed for AY 2025-26. However, many taxpayers are still waiting to receive their income tax refunds.

Why Income Tax Refunds Are Getting Delayed

Income tax refunds may take longer in certain cases, especially when the return includes high-value refund claims. Such returns are usually checked more carefully through additional system validations, which can delay processing.

In some situations, refunds may also be adjusted or temporarily held under Section 245(2) of the Income Tax Act. This provision allows the Income Tax Department to set off the refund against any pending tax dues of the taxpayer.

However, refund delays are not always due to system or departmental issues. In many cases, the delay happens because of simple errors made by taxpayers, such as incorrect details or mismatches in the return.

In such cases, the Income Tax Department may send intimation to the taxpayer. To receive the refund, the taxpayer must respond to this intimation within the given time.

Many salaried employees have received such intimations. This usually happens when employees claim deductions like 80C, 80D, or HRA in their ITR, but did not inform their employer about these deductions at the time TDS was deducted.

Such mismatches are very common. They usually happen due to small reporting mistakes or a mismatch in the tax regime, such as when TDS is deducted under the new tax regime but the return is filed under the old regime with deductions claimed.

What If the Income Tax Department Fails to Process Your ITR by 31 December 2026?

Centralised Processing Centre (CPC) must process an Income Tax Return and send an intimation under Section 143(1) within 9 months from the end of the financial year in which the return is filed.

This time limit is prescribed under Section 143(1) of the Income Tax Act. If the ITR is not processed within this period, it is treated as time-barred, and no adjustment or demand can normally be raised by the department.

Accordingly, if an ITR is filed on 31 July 2025, 16 September 2025, or even 31 December 2025 (belated return), the last date for the CPC to process the return will be 31 December 2026.

If the CPC does not process the return within this time limit, it cannot legally issue an intimation under Section 143(1) after that date.

Filing the ITR within the extended due date for non-audit taxpayers for FY 2024-25, does not change the processing timeline. It neither speeds up nor delays the time limit available to the tax department for processing the return.

Impact of the NUDGE Campaign on Income Tax Refund Processing

Another reason for slower tax refunds is the CBDT’s “Nudge” campaign, which was started in December 2025. Under this campaign, taxpayers whose returns have mismatches or differences are informed through SMS and email.

Taxpayers are asked to review the issue and either:

·         Accept the difference pointed out by the Income Tax Department, or

·         Correct it by filing a revised or updated return

Although this campaign is meant to encourage voluntary tax compliance, refunds in such cases are put on hold until the taxpayer responds.