Tax refunds for FY 2024-25 are taking longer than usual, particularly for high-income earners, as the Income Tax Department has strengthened its verification processes to curb fraudulent exemption claims. The scrutiny mainly targets individuals earning over Rs 20 lakh who claimed exemptions under the old tax regime.
Authorities have uncovered fabricated claims, such as fake medical expenses and donations to political or religious organizations, estimated at around Rs 700 crore. Refunds exceeding Rs 10 lakh are especially affected, as enhanced risk assessments are conducted at Central Processing Centres before disbursing funds.
A senior tax official noted that many high-income taxpayers have repeatedly filed wrongful claims, prompting notifications to amend returns. Advanced analytics and AI are being used to detect inconsistencies, and verification exercises also focus on those assisting others in filing incorrect exemptions.
As a result, refund disbursements have slowed. By September 17, total payouts dropped 24% to Rs 1.60 lakh crore from Rs 2.10 lakh crore the previous year. The compliance drive has already recovered substantial sums, with taxpayers withdrawing Rs 963 crore in claims, paying Rs 409.50 crore in additional taxes, and disclosing foreign assets and income totaling over Rs 30,000 crore.
Taxpayers should expect delays, especially for large exemption claims, but these enhanced checks are intended to ensure fairness and prevent illegitimate refunds.
