Income Tax Refund Update 2025: CBDT Chairman Explains Delays and Assures Completion by December

Millions of Indian taxpayers are currently experiencing unusual delays in receiving their Income Tax Refunds for Assessment Year (AY) 2025-26. While non-audit Income Tax Returns (ITRs) typically lead to quick refunds, taxpayers who filed their returns by the September 16 deadline have noted significant hold-ups this year.

In response to growing taxpayer concerns, Ravi Agrawal, Chairman of the Central Board of Direct Taxes (CBDT), has addressed the issue, confirming that the remaining refunds are expected to be released by the end of November or, at the latest, December 2025. The Chairman provided clarity on the reasons behind the lag, attributing it to a focused effort by the department to scrutinize certain claims.

The Reason for the Refund Delay

Chairman Agrawal revealed that the primary cause for the backlog is the income tax department’s decision to initiate a detailed examination of high-value and "red-flagged" refund claims.

• Suspicious Deductions: The system flagged a number of claims where taxpayers sought deductions that appeared suspicious or irregular based on automated checks.

• Targeted Scrutiny: To prevent incorrect or fraudulent payouts, files associated with these questionable claims have been segregated and pulled up for manual verification and cross-checking. This meticulous process, while necessary, has inevitably slowed down the overall refund cycle.

• Call for Revised Returns: To expedite the process for taxpayers who made genuine mistakes, the department has reached out to many individuals. The CBDT is advising taxpayers to file a Revised Return if they suspect they may have made an error or missed crucial information in their original ITR, which would allow the department to process the claims faster.

When to Expect the Remaining Refunds

While small or low-value refunds are being processed and released continuously, the files held back due to the enhanced scrutiny will take slightly longer.

• Timeline Assurance: Chairman Agrawal assured the public that the refunds currently under review are targeted to be disbursed by the end of November 2025, with an absolute deadline of December 2025.

• Continuous Process: He emphasized that this is a continuous administrative function, and the department is making every effort to ensure all valid refunds reach taxpayers as quickly as possible.

 Analysis of Negative Refund Growth

Official data reveals a curious trend: the total value of refunds issued between April 1 and November 10 this year shows an 18% decline compared to the same period in the previous year. The cumulative refund amount during this period stood at approximately ₹2.42 lakh crore.

The CBDT Chairman offered two main explanations for this negative growth:

1. Fewer Refund Claims: A structural decrease in the total number of refund claims being filed by taxpayers.

2. TDS Adjustments: Changes implemented regarding the calculation and deposit of Tax Deducted at Source (TDS), resulting in less over-deduction and consequently fewer large refund claims.

Tackling Pending Tax Disputes

In addition to processing refunds, the CBDT is also actively working to reduce the mountain of pending tax-related litigation and appeals.

• Reducing Backlog: Agrawal noted that the number of pending appeals surged during the COVID-19 pandemic. However, this year, the department has successfully resolved 40% more appeals compared to the previous year.

• Future Outlook: The department aims to further reduce the number of pending appeals by the end of the year, signaling a broad push towards greater administrative efficiency and dispute resolution.

In conclusion, taxpayers waiting for their high-value refunds can expect the amount to be credited to their accounts before the close of the calendar year, as the CBDT completes its targeted review of suspicious claims.