Still Waiting For Your Income Tax Refund? Expert Flags Reasons Behind Delay—Here's What You Should Do

If you filed your income tax return on time this year and are still waiting for a refund, you are not alone. Across income brackets, taxpayers are facing unusually long delays in refund processing in 2025, even where filings appear complete and error-free, with little visibility on timelines or reasons.

According to tax expert, Gauri Chadha, this year has seen a fundamental shift in how refunds are being processed. "Unlike last year, a majority of cases have been put on hold," Chadha said during a recent discussion on NDTV Profit. "Even the processing of returns itself is getting delayed."

Refund delays are often caused by familiar issues — failure to e-verify returns, incorrect bank validation, or adjustments against outstanding tax demands from earlier years. "This year is exceptional," she says, noting that scrutiny has expanded beyond the usual high-income or high-risk profiles.

What sets this year apart, Chadha explained, is the scale of scrutiny and communication from the tax department. A significantly larger number of taxpayers are receiving messages asking them to review deductions, exemptions, and high-value transactions.

One key source of anxiety has been official messages sent by the income tax department. Chadha emphasised that these messages are communications, not formal notices, though the distinction has not always been clear to taxpayers.

"The department has clarified that if there is no error from the taxpayer’s end, this communication can be ignored," she said. Missing this deadline does not close the door entirely, but it does raise the cost of compliance. From Jan. 1, taxpayers can file an updated return, which comes with higher penalties and interest.

While the tax department has not published any official thresholds, Chadha said that refund size appears to be a trigger."Based on what we are seeing, refunds above Rs 10,000 are being held up," she said, adding that scrutiny is more common when the amount crosses Rs 50,000 or Rs 1 lakh.

Chadha pointed out that property purchases and other large transactions are also being flagged even when taxpayers are not claiming exemptions. "Even if you buy property from your own tax-paid money and are not required to report it in the return, the transaction is still being reported elsewhere," she said.

Legally, the income tax department has time until the end of the next financial year to process returns. In practice, refunds were often credited within one or two weeks in earlier years. This year, Chadha expects movement only after the Dec. 31 deadline for revising returns passes.

She cautioned against revising returns unnecessarily. “Revise only if there is a discrepancy. If everything is correct, it’s better to let the process play out.”

Chadha also flagged increasing compliance issues linked to the old tax regime, particularly for taxpayers claiming deductions and exemptions.

Switching between the old and new regimes has added another layer of complexity. Chadha highlighted confusion around mandatory filings like Form 10-IA, which must be completed correctly when changing regimes.

“If you’re switching regimes, the form and its acknowledgement number become critical while filing your return,” she said.

To avoid delays, Chadha stressed the importance of cross-verifying disclosures before filing.

She added that even exempt income needs to be reported. "Leaving out income — even if it’s not taxable — creates red flags."

Several administrative factors contributed to the disruption: late release of filing utilities, extended deadlines, and a shorter window for revising returns compared with previous years.

For now, taxpayers waiting on refunds have limited choices beyond checking for discrepancies and watching the Dec. 31 deadline.