Income Tax Refund Delayed? Here Are the Real Reasons and Solutions to Fix Common Mistakes

It can be very irritating to wait for an income tax refund; it becomes a more frustrating task when you file your return on time. Yet many taxpayers experience delays for reasons that are often avoidable. Understanding these common causes can help you take corrective action and ensure faster processing in the future. Here are the six most frequent reasons why income tax refunds are often delayed:

1. TDS, Form 26AS and AIS Mismatch

One of the main causes why income tax refunds are delayed is discrepancies or mismatches between details in your filed income tax return (ITR) and the information reflected in Form 26AS (tax credits statement), AIS (Annual Information Statement) and TIS (Taxpayer Information Summary).

Even a small inconsistency like a wrong TDS amount, mismatched TANs, or missing entries can attract the attention of the income tax department and can lead to delayed refunds.

If you report income or TDS incorrectly or fail to include something appearing in AIS, the CPC (Centralised Processing Centre) puts the refund on hold until discrepancies are resolved.

If you want to fix these problems, then compare TDS certificates, Form 26AS, AIS, and details before filing your return. If you find unreported or incorrect entries in AIS, submit feedback to the tax portal to correct them. If you find any mismatches later, then file a revised return.

2. Refund Adjusted Against Past Demand

If you owe tax belonging to an earlier year, then there is are chance the income tax department may reduce or fully offset your current refund against that liability. This adjustment usually takes place after notices are issued under Section 245.

To fix this issue, check your “Outstanding Demand” for previous years on the income tax portal. If the demand is correct, pay or settle it. If not, file a rectification request for the raised demand.

3. Bank Account Not Pre-validated

The Income Tax Department requires the bank account mentioned in your return to be pre-validated on the e-filing portal. The refunds are not credited to accounts not pre-validated. If you enter an incorrect IFSC or account number, or your bank account is inactive or closed, the refund cannot be credited.

To fix this issue, visit the e-filing portal of the income tax department, then go to your profile, then click on “My Bank Account”, and then on the pre-validate option. Make sure the details like PAN, name, IFSC, account number, etc., match exactly with your bank records.

4. High-Value Refunds Under Extra Scrutiny

The income tax return (ITR) is usually sent for deeper scrutiny when the refund amount is large for income claims verification, TDS validation, and cross-checking bank or investment details. This is common for large capital gains adjustments, high-value TDS refunds, business/professional refunds, etc.

To fix this issue, ensure all income sources are fully reported. Keep documentation ready (Form 16, TDS certificates, sale deeds, bank statements). Cooperate promptly with any queries raised.

5. Defective ITR

The income tax department may declare your return defective if certain required information is missing or incorrect, for instance, the wrong return type, missing income, TDS claim mismatches, etc. If your return is considered defective, the system sends a notice asking you to correct errors. Refund processing stops until you respond.

The typical reasons why your returns are declared as defective are Missing income details, Incorrect return form, TDS claimed, but income was not reported, and Balance sheet/profit details missing (for business/profession).

To fix this issue, respond timely to the notices issued under Section 139(9). Correct the errors and furnish a revised return. This clears the defect and helps restart the refund process.

6. System Backlog or Manual Verification Required

Sometimes, refunds are even delayed when you timely file your return without any mistakes; this is due to high-volume return processing at CPC, random manual scrutiny selection and additional verification needed for certain transactions. Department, in rare cases, asks for a manual visit or documents to verify identity or income.

To fix this issue, keep a close eye on your refund status through TIN NSDL or the Income Tax Portal. Respond promptly when the CPC or your Assessing Officer contacts you.