Income Tax Refund Delay in 2025? Know the Real Reasons Here
Income tax refunds in 2025 are delayed due to stricter verification checks, data mismatches, system upgrades, and heavy processing backlogs at the Centralised Processing Centre.
If you filed your return on time this year and your refund still has not arrived by November 2025, you are not alone. Many taxpayers are seeing “Processed” on the portal while the money is missing in the bank account, or they are running into new status messages like “refund failed,” “restricted refund,” or “no refund till verification.” Let’s explore why these delays are happening and proactive steps to resolve them.
Current Processing Status
The Central Board of Direct Taxes (CBDT) reported that more than 8.05 crore income tax returns were filed for the Assessment Year 2025-26. Out of these, about 87% have been processed, but nearly 1.30 crore returns are still pending. Another 32 lakh returns are awaiting e-verification.
The Centralised Processing Centre (CPC) in Bengaluru, which handles return processing and refunds, is reportedly managing a heavy backlog. The daily processing rate has dropped significantly due to a combination of system load and manual verifications, slowing refund disbursements into November.
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Primary Reasons for Refund Delays
Several overlapping issues are responsible for this year’s delays, ranging from stricter verification filters to new procedural rules and taxpayer-side errors.
1. Enhanced Scrutiny and Stricter Validation
The Income Tax Department has tightened its refund validation filters in 2025. These automated systems identify potentially risky or incorrect refund claims. So, refunds over Rs. 1 lakh are often subject to additional review or manual verification.
Between April and mid-October 2025, total personal income tax refunds dropped by nearly 48%, from Rs. 1.21 lakh crore in 2024 to Rs. 62,359 crore this year. This decline reflects the Department’s cautious approach, focusing on accuracy and fraud prevention rather than speed.
2. Complex Returns Undergoing Manual Verification
Returns that include multiple income sources such as business income, foreign income, or capital gains require deeper review. These complex filings often need manual verification, particularly when there are multiple deductions or foreign remittances involved.
Simple salary-based returns can be processed within two to three weeks but business or high-value cases may take 30-60 days or longer, depending on the volume of pending reviews at CPC.
3. Data Mismatches and Discrepancies
A significant number of delays stem from mismatches between filed ITRs and third-party data sources such as Form 26AS, AIS (Annual Information Statement), or TIS (Taxpayer Information Summary). The most frequent problems include:
- TDS mismatches between employer or bank filings and the taxpayer’s return
- PAN-Aadhaar linking errors that prevent proper verification
- Income discrepancies compared to previous years’ filings
- Incorrect or unvalidated bank details blocking credit transfers
When these inconsistencies occur, the CPC system automatically flags the case for review, halting the refund until the issue is resolved.
4. Pending Tax Audit Returns
The government extended the tax audit filing deadline to December 10, 2025, which means tax audit cases are still being filed. This overlap has created additional load on the CPC, as audit cases are more complex and consume more processing time. So refunds for non-audit cases have also been delayed while the system clears the growing backlog.
5. Technical and System Upgrades
The Income Tax Department has implemented several portal upgrades and backend improvements during 2025 to improve accuracy, security, and fraud detection. While these changes will enhance long-term efficiency, they have temporarily slowed refund processing as systems transition and staff adjust to the updated workflows.
6. New TDS/TCS Correction Rule
A major procedural change came into effect on April 1, 2025, introducing a two-year limit for correcting errors in TDS and TCS statements under Section 297(3)(f). This rule means any correction such as fixing an incorrect PAN or tax amount must be made within two years from the end of the financial year.
Because of this, many refunds linked to incorrect or late TDS filings have been delayed. Departments and employers are still adapting to this stricter timeline, leading to processing holdups while corrections are re-submitted and validated.
7. Government Liquidity Management
Though not officially confirmed, periodic delays in large-scale refund disbursements sometimes occur due to government cash flow management. Refund batches may be temporarily postponed, especially toward the end of fiscal quarters when funds are reallocated for other obligations. These delays are generally short-lived and resolved once budgetary allocations stabilize.
8. Delayed E-Verification by Taxpayers
Many taxpayers are unknowingly delaying their own refunds by failing to e-verify promptly. Processing begins only after e-verification is completed, whether through Aadhaar OTP, net banking, or by posting the ITR-V form. Returns awaiting verification are essentially in limbo, meaning the refund clock hasn’t even started.
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Expected Processing Timelines
For taxpayers who filed simple returns under ITR-1 or ITR-2 with accurate details and pre-validated bank accounts, refunds are typically processed within 2 to 3 weeks after e-verification.
For more complex returns involving business income, multiple deductions, or any flagged discrepancies, the waiting time can extend to 4 to 8 weeks. Tax audit and foreign income cases may take even longer if manual scrutiny is required.
How to Proactively Avoid or Fix Delays
Taxpayers can take a few proactive steps to minimize the risk of refund delays:
- Link PAN with Aadhaar and ensure both are active and updated.
- Validate your bank account on the e-filing portal to enable direct refund credit.
- Check Form 26AS and AIS before filing to identify mismatches in TDS or reported income.
- E-verify your ITR promptly, preferably within 24-48 hours of filing.
- Ensure there are no outstanding tax dues from earlier years, as these can offset or hold refunds.
- File audit reports and complex returns early to avoid end-of-season backlogs.
For taxpayers whose refunds have already been delayed beyond 60 days after e-verification, it’s advisable to raise a grievance through the Income Tax e-filing portal or contact the CPC helpdesk. Including your acknowledgment number, bank details, and refund reference helps speed up the resolution.
Interest on Delayed Refunds
Under Section 244A of the Income Tax Act, taxpayers are entitled to interest at 0.5% per month (6% per year) for delays in refund payment, provided the return was filed on time. This interest is automatically added to your refund amount and is taxable in the year of receipt. It offers partial relief, but it doesn’t fully offset the inconvenience of waiting months for a refund.
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