The Central Board of Direct Taxes recently extended the income tax filing deadline from September 15 to September 16, but even after more than two months, a large number of taxpayers are still waiting for their refunds for Assessment Year 2025–26. Data released by the Income Tax Department shows that over 7.57 crore returns had been filed by September 23, yet refunds for many individuals remain stuck in processing.
Officials say that the main reason for the delay is the scrutiny of returns flagged by the department’s automated systems. According to CBDT Chairman Ravi Agrawal, several refund requests were marked as high-risk due to unusual deduction patterns or errors in the information provided. Claims that appeared inflated or suspicious have been classified as “high-value” or “red-flagged”, and these cases require a more detailed examination before any money can be released. Agrawal explained that the department has contacted such taxpayers and asked them to file revised returns if they missed reporting something or made incorrect claims.
He added that low-value refunds are already being issued, but cases involving large deductions or mismatches have slowed down the overall processing time. The system detected several instances where taxpayers had claimed deductions, they were not eligible for, which forced officers to manually review these returns to prevent wrongful payouts. This enhanced scrutiny has contributed to the backlog.
The overall volume of refunds paid out this year has fallen sharply. As of November 10, the total value of refunds issued between April 1 and November 10 had declined by nearly 18 percent to around ₹2.42 lakh crore. Agrawal noted that this decline is partly due to fewer refund claims and partly because earlier rationalisation of TDS rates reduced the size of refunds.
Agrawal also highlighted the department’s efforts to reduce litigation involving direct taxes. He said appellate authorities have disposed of more than 40 percent more appeals this year compared to the previous year, helping ease the backlog that accumulated during the pandemic. The priority now, he said, is ensuring that honest taxpayers receive their refunds without unnecessary delay while preventing the release of inflated or fraudulent claims.
The department expects that most pending refunds will be processed and released by the end of December 2025, once the scrutiny of flagged cases is completed and necessary clarifications are received from taxpayers.
