Why Income Tax Returns are Still Unprocessed after a month passed since ITR Deadline?

The department has processed 73.71% of total verified ITRs, as of August 22, 2024, till 1 p.m. Out of the 7,13,00,901 verified ITRs, 5,25,53,097 have been processed. So, another huge number remaining adds up to 1,87,47,804 ITRs, which forms 26.29% of the total verified ITRs, that are yet to be processed. If your ITR is among these, you might wonder why the rest were processed and not yours.

The process of ITR by the CPC of the Income Tax Department is done digitally and by automation systems. Close to the due date in the last week of July, considering most of the ITRs were filed, it is a great achievement that 70% of the ITRs got processed within 20 days. The balance ITRs got processed too. Any taxpayer claiming a refund may expect the same soon after it is processed. However, on the other hand, average processing time has reduced drastically from an average of 93 days in 2013 to a mere 11 days in 2023, bringing into question the delay noted in processing the other ITRs.

Difference Between Processing and Scrutiny

Many taxpayers are afraid that a delay in the processing of their returns somehow flags their ITR for scrutiny. But at the same time, experts ensure that processing is separate from scrutiny. The processing phase primarily checks for mathematical accuracy and verifies tax credit claims, while scrutiny is a later step where the tax authorities may issue notices if further examination is needed.

It’s important to note that the choice of returns for verification is totally unrelated to the process of processing tax returns. Delays are usually for procedural reasons other than verification. In case your ITR is selected for verification, you will receive an intimation stating the reasons and necessary actions.

Reasons your ITR may Practically be Unprocessed

There are a number of probable reasons why your ITR has not been processed as yet. These could vary from discrepancies like PAN name mismatch, complex ITR forms, and scrutiny cases.

It might be because ITR forms are very complex. Forms like ITR-2 and ITR-3, which have multiple inflows of income, such as capital gains or foreign assets, have very detailed information everything takes a lot of time to process.

Larger sums of tax refund claims may also slow down the processing.

“Tax refunds could be delayed due to the need for the rigorous checks of the larger claims,” says a Tax Expert.

ITRs containing errors or incomplete information, incorrect PAN details, incorrect bank information, etc., are also likely to get flagged for assessment, creating further delays in the process.

As disconcerting as such a scenario may be, it is very important to bear in mind that delays are not connected to scrutiny. This includes the patience of another, as the rest of the remaining ITRs are expected to be processed shortly.