Income Tax Refunds Still Awaited? Major Causes Behind This Year’s Processing Delays

Several taxpayers who filed income tax returns (ITRs) for the Financial Year 2024-25 (Assessment Year 2025-26) are still awaiting their refunds. It has been such a long time since taxpayers have not received their income tax refunds. The final due date to furnish tax refunds for FY 2024-15 was September 16, 2025, and today is February 05, 2026. It has been more than four months, and there are still taxpayers who have not received their refund. Such delays do not usually occur. As per the law, the Income Tax Department is allowed to process returns and release refunds by December 31, 2026, meaning the department is still under the allowed time limit.

As per the data available on the Income Tax Portal as of January 19, 2026, there are a total of 13.67 crore registered users, of which 8.82 crore have filed ITRs for the FY 2024-25, and 8.69 crore of them have successfully verified. Among these, 8.17 crore returns have been processed. Lakhs of taxpayers have still not received their tax refunds.

One of the key reasons why refunds are delayed is when high-valued claims are made because such claims require extra scrutiny and validation. In some cases, refunds may be withheld or adjusted under Section 245(2), which permits tax authorities to set off refunds against pending tax demands.

In several cases, refunds are delayed even due to minor errors made by taxpayers. In such cases, the tax department issues notices asking for clarification. Responding to these notices becomes really important at this stage since refunds are released following responses to these communications.

In the case of salaried employees, refunds are generally delayed when they claim deductions such as Section 80C, 80D, or HRA in their returns; however, they do not disclose these to their employers at the time of TDS (Tax Deducted at Source) deduction. These types of discrepancies often lead to the issuance of notices and ultimately result in delayed refund processing.

If the CPC does not process your Income Tax Return (ITR) within the allowed time limit, then later it cannot legally send you an intimation under Section 143(1). For ITRs filed on July 31, 2025, September 16, 2025, or December 31, 2025, the last date for CPC to process them is December 31, 2026. After this date, CPC loses the power to process those returns or issue any Section 143(1) intimation for them.

The Central Board of Direct Taxes (CBDT) launched the Nudge Campaign in December 2025. This was another key reason behind the refund delay this FY. Under this campaign, taxpayers were informed through SMS and email that the department had noticed discrepancies in their returns.