Income Tax Refund Update: CBDT Confirms Most Pending Refunds to Be Released by December

Taxpayers waiting for their income tax refunds finally have good news. The Central Board of Direct Taxes (CBDT) has indicated that the long delay in issuing refunds is likely to end soon. This year, many taxpayers experienced significant delays in getting their refunds credited, but the tax authority has now clarified the reasons behind the slowdown and provided a clear timeline for processing pending cases.

According to a report by PTI, CBDT Chairman Ravi Agrawal stated that the scrutiny of high-value refunds and system-flagged returns is almost complete. He confirmed that most pending refunds will be processed and credited either within this month or by December. Low-value refunds are already being issued, but several cases required additional verification due to incorrect or exaggerated deduction claims.

The Chairman explained that some taxpayers had claimed excess deductions or filed returns with errors, making detailed checks necessary. As the verification process nears completion, the department expects the next few weeks to bring relief to the majority of taxpayers who have been waiting for their refunds.

However, the delay in refunds this year is not solely due to verification. CBDT highlighted several key factors contributing to the slowdown. A significant number of high-value refunds required extra scrutiny to ensure accuracy. In many cases, the department identified mismatches, suspicious claims and incorrect deductions, which triggered system-based red flags. Additionally, some taxpayers were asked to submit revised returns, which extended the processing timeline further.

Another reason behind lower refund activity is a drop in the overall number of refund claims filed this year. CBDT noted that total refund issuance has declined compared to the previous year. Two major factors contributed to this trend: changes in TDS rates led to lower tax deductions for many individuals, reducing the need for refunds; and fewer taxpayers filed refund claims altogether. As a result, overall refund growth has appeared lower this year.

Individual cases may also face delays due to various reasons. Refunds above ₹1 lakh undergo stricter checks. Returns involving foreign income, capital gains or multiple income sources often require detailed manual scrutiny, adding extra time to the processing cycle. Filing a revised return also increases the processing window. Refunds cannot be issued if the return is not e-verified on time. Additionally, mismatches between Form 26AS, AIS or data from employers and financial institutions can cause the return to be placed on hold until discrepancies are resolved.

Official data shows that between 1 April and 10 November, total refunds issued declined by nearly 18 percent, amounting to over ₹2.42 lakh crore during the period. Despite the slowdown, CBDT is confident that the majority of pending valid refunds will be cleared soon.

This year also saw changes in the tax return filing timeline. Due to system upgrades and updates in the ITR forms, CBDT extended the last date for individual taxpayers from 31 July to 15 September 2025. Later, due to technical issues, the deadline was extended further to 16 September. These extensions aimed to ensure that taxpayers had enough time to file their returns smoothly on the updated system.

For taxpayers awaiting their refunds, the latest update brings reassurance. With verification nearly complete and the department expediting the process, most pending refunds are likely to be credited by the end of this month or December. Staying vigilant about return accuracy, timely e-verification and correcting mismatches can help avoid delays in the future.