A large number of taxpayers are worried about not receiving their refunds despite filing taxes and are constantly asking questions on social media. Why is your money “stuck in processing?” What does a “defective return” notice mean, and what are the real reasons behind this delay? Learn the crucial steps you should take immediately to get your refund back on time.
Why are taxpayers concerns growing
Complaints about delayed income tax refunds have increased significantly over the past few months. Many taxpayers are reporting that they have filed their returns, but the status is either “under processing” or they have received a “defective return” notice. In many cases, complex details such as foreign investments, capital gains, or advance tax have led people to file revised returns, slowing down the refund process.
Tax experts point out that factors such as high CTC, multiple sources of income, or complex investments can severely slow down the process. Let’s take a look at the fundamental reasons that are holding up your refund.
5 Reasons for Refund Delays
The Income Tax Department can withhold refunds for a number of technical and administrative reasons.
The first and most common reason for refund delays is the scrutiny of high-value refunds. If your refund exceeds ₹1 lakh, the department conducts additional and more thorough scrutiny, leading to significant processing delays.
The second major reason is the verification of complex income sources. Returns containing foreign income, capital gains, or income from multiple companies require manual verification, which causes delays.
A third serious reason is receiving a ‘defective return’ notice. Upon receiving a defective return notice under Section 154, the refund is held up until you file a new ITR.
The fourth reason is filing a revised ITR. Upon filing a revised ITR, the system takes a long time to process the new data.
The fifth, most important reason is credit mismatch. If the tax credit shown in your ITR does not match the data in Form 26AS or AIS, the department may withhold the refund.
Do This Work If Refund Stuck
According to tax experts, administrative issues, as well as technical scrutiny, cause refund delays. High-value refunds require additional verification, while if there are any serious errors or discrepancies in the return, the system blocks it and asks the taxpayer to file a new ITR to correct the error. Keep in mind that simple forms like ITR-1 (Sahaj) are processed quickly, while complex forms like ITR-2 and ITR-3 often experience delays.
Even minor negligence on the part of the taxpayer can significantly hinder the refund. The most common mistake is not verifying your ITR after filing it. If verification fails, the return becomes invalid and the refund is not issued.
Furthermore, even a minor discrepancy in the bank account details provided in the ITR can completely stall the refund process. Finally, if the tax credit (TDS) you claim does not match the data reported by your employer or financial institution in your Form 26AS or Annual Information Statement (AIS), the refund is withheld.
Take these steps immediately if your refund is stuck
If your refund has been stuck for a long time, there’s no need to panic; instead, you need to be proactive.
First, regularly check the current status of your return by visiting the Income Tax e-filing portal and ensuring there are no pending notices.
Next, ensure you have successfully verified your ITR after filing it.
The next crucial step is to match your ITR data with Form 26AS and AIS. If any mismatches are found, correct them immediately.
If the data is correct and the refund is still pending, visit the CPC portal and file a grievance and explain your problem in detail.
If you filed a revised ITR, it is natural for it to take longer to process; please be patient during this time.