Despite the Central Board of Direct Taxes (CBDT) receiving over 7.57 crore Income Tax Returns (ITR) by the revised deadline of September 16, a significant number of taxpayers still await their refunds for the Assessment Year 2025–26.
More than two months after the filing period, CBDT Chairman Ravi Agrawal has provided clarity on the backlog and set a clear timeline for resolution.
Also read: The Professional Exit: 10 Essential Steps to Take Before You Resign
The Core Reason for Delays: System Scrutiny
Agrawal confirmed that the department is currently conducting a detailed review of certain refund claims that the system automatically flagged. The scrutiny process focuses on preventing erroneous or inflated payouts.
Reasons why the Income Tax Department’s system flags a claim include:
- High-Value Claims: Returns with exceptionally large refund requests.
- Incorrect Deductions: Claims where the system detects unusual or potentially ineligible deduction patterns.
- Mismatched Data: Discrepancies between the data filed by the taxpayer and the information available to the department.
Agrawal stated the department is analyzing these cases carefully to prevent wrongful refunds. He also noted that officers are examining returns more closely where the system detected unusual deduction patterns, slowing down the overall process.
Action and Timeline for Resolution
To address the flagged claims, the tax department has taken proactive steps:
- Requesting Revised Returns: The department has written to some taxpayers, advising them to file revised returns if they missed or wrongly reported any information.
- Low-Value Claims Released: The department confirms it is already releasing low-value refunds quickly.
Timeline: CBDT Chairman Agrawal expects the department to clear the majority of the remaining pending refunds by the end of December 2025.
Context: The Drop in Refund Issuances
Official data indicates a sharp decrease in the total value of refunds issued this year. As of November 10, total refunds fell by nearly 18% to approximately ₹2.42 lakh crore compared to the same period last year.
Agrawal attributed this decline to two primary factors:
- Fewer Claims: The overall number of refund claims has decreased.
- TDS Rationalization: Earlier rationalization of Tax Deducted at Source (TDS) rates led to smaller refund amounts overall.
Furthermore, Agrawal noted that the department is actively working to reduce direct tax litigation. Appellate authorities have cleared over 40% more appeals than last year, successfully reducing the pending backlog built up during previous years.
. . . . .
Also read: The Professional Exit: 10 Essential Steps to Take Before You Resign
