Why December 31, 2025 Has Become a Major Risk for Taxpayers: Experts Warn Over Stuck ITR Refunds

By Siddhi Jain | Dec 21, 2025, 08:23 IST

ITR Refund Alert: For millions of taxpayers waiting for their income tax refunds, December 31, 2025 is no longer just another deadline—it has turned into a critical turning point. While many taxpayers believe that paying excess tax automatically guarantees a refund, experts say this assumption is becoming increasingly risky under the current income tax processing system.

Chartered accountants and tax professionals are raising serious concerns that if corrective action is not taken before this date, even legitimate refunds may be lost, not because of taxpayer mistakes, but due to system delays and procedural limits.

How the Income Tax Refund System Works—and Where the Risk Lies

In simple terms, when a taxpayer’s total tax liability is lower than the tax already paid during the year, the excess amount should be refunded. However, in practice, the Income Tax Department often adjusts refunds against past outstanding tax demands under Section 245 of the Income Tax Act.

The real problem arises when:

The Income Tax Return (ITR) is filed correctly
But processing by the Centralised Processing Centre (CPC) is delayed
And later, discrepancies or errors are flagged after key deadlines have passed

At that stage, taxpayers may find themselves helpless—even if the mistake was minor or unintentional.

Why December 31, 2025 Is So Important

December 31, 2025 is the last date to file a revised ITR or a belated ITR for Assessment Year 2025–26. After this date:

No corrections can be made to the original return
Even small mistakes, missing details, or reporting errors cannot be fixed

This is where the danger lies.

If CPC processes your ITR after December 31, 2025 and points out an error, you will no longer be allowed to file a revised return. This situation puts taxpayers at a serious disadvantage.

Experts Express Strong Concern Over Processing Delays

Chartered Accountant Himank Singla has openly criticized the situation, highlighting that a large number of original ITRs are still pending processing. According to him, there is a real possibility that many returns will be processed only after December 31, 2025.

In such cases, if CPC identifies any discrepancy:

The taxpayer cannot revise the return
The only remaining option is filing ITR-U (Updated Return)

The problem? ITR-U does not allow refund claims.

This means that even if the error is not the taxpayer’s fault, and even if a refund is genuinely due, the taxpayer may lose the refund simply because of system delays.

Shocking Numbers Highlight the Scale of the Risk

As of December 16, 2025:

Around 8.34 crore ITRs had been filed and verified
Only 7.68 crore returns had been processed

This leaves lakhs of returns still pending with CPC—these are the returns most at risk of running into post-deadline complications.

What If CPC Does Not Process the ITR by December 31, 2026?

Under the law, CPC has nine months from the end of the financial year to process an ITR. For returns filed in FY 2025–26, the last permissible processing date is December 31, 2026.

If CPC fails to process the return even by this date:

The return is treated as final
CPC cannot raise any demand or make adjustments
If a refund is due, the taxpayer becomes entitled to the refund along with interest

While this sounds reassuring, experts caution that taxpayers should not rely on this outcome, as delays and disputes in practice can still be stressful and time-consuming.

What Options Remain After December 31, 2025?

Once this deadline passes, taxpayer choices become extremely limited:

1. Filing ITR-U (Updated Return)

Allowed, but no refund can be claimed
Losses cannot be carried forward
Additional tax liability applies, which increases with time

2. Filing a Rectification Application

Possible only for clear, record-based errors
Such as calculation mistakes, TDS mismatch, or clerical errors
New deductions, new income, or fresh claims cannot be added

If the issue does not fall within rectification limits, the taxpayer may be forced into the appeal process, which involves more time, effort, and legal cost.

Rising Cost of Delay for Taxpayers

Experts also warn that if a taxpayer is compelled to file ITR-U after December 31, 2025, the additional tax burden increases over time. The longer the delay, the higher the extra tax payable—turning a simple correction into a financial setback.

Clear Message for Taxpayers

The message from tax experts is loud and clear:
Do not take December 31, 2025 lightly.

If you have already filed your ITR:

Regularly check its processing status
Monitor communications from CPC
Act immediately if any issue or mismatch appears
File a revised return well before the deadline, if needed

In the current system, inaction can cost you a genuine refund, even when you are not at fault. Staying proactive is no longer optional—it is essential.