Many taxpayers who filed their ITRs for FY 2024–25 weeks or even months ago are still waiting for their refunds, even though the September 16, 2025 filing deadline has long passed. With individuals reportedly checking their bank accounts almost daily, the Income Tax Department has attributed the delay to deeper scrutiny of suspicious deduction claims and mismatched disclosures.

While inaugurating the Taxpayers’ Lounge at the India International Trade Fair (IITF), Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal said the department has already reached out to those who might have missed key disclosures. These taxpayers have been asked to file revised returns. According to PTI, he added, “Low-value refunds are being released. We analysed and found that several incorrect refund and deduction claims were made. This is a continuous exercise. We expect to release the remaining refunds by this month or by December.”

Meanwhile, amidst such delays, experts say that taxpayers are legally entitled to statutory interest under Section 244A of the Income Tax Act in case there is a delay in refund without their fault.

How Interest on Delayed Refunds Is Calculated

Simple interest at 0.5% per month (6% per year) is payable on delayed income tax refunds.

For returns filed on or before September 16, 2025, interest is calculated from April 1 of the assessment year until the refund is issued. For belated returns, interest is counted from the actual date of filing.

The exact interest period varies based on the type of tax paid and the timing of payment or return filing.

Experts note that taxpayers whose refunds are delayed without any fault on their part are entitled to statutory interest under Section 244A of the Income Tax Act.

Summary of Interest Computation on Delayed Refunds

1. TDS/TCS/Advance Tax (Section 199)

Interest Rate: 0.5% per month

Period: From April 1 of AY until refund date (or from filing date for late returns)

2. Self-Assessment Tax (Section 140A)

Interest Rate: 0.5% per month

Period: from the later of filing date or tax payment date until refund

3. Other Refund Cases

Interest Rate: 0.5% per month

Period: From date of tax/penalty payment to refund

4. Excess TDS/TCS paid by deductor Interest Rate: 0.5% per month Period: From refund claim date or date of payment until refund Interest is paid automatically and included in the final refund amount reflected in the taxpayer's bank account.

When Interest Is Paid And When It Is Not

Interest on delayed income tax refunds is paid only when the delay is not caused by the taxpayer.

You may lose interest eligibility if:
• You provided incomplete or incorrect information.
• Your bank account details are wrong or not pre-validated.
• You responded late to notices.
• There were mismatches or missing disclosures in your ITR.
• Your PAN became inoperative.
• You filed a belated return.

Refund amounts below ₹100 also do not qualify for interest.

Interest under Section 244A continues until the refund is actually issued and is generally not affected by scrutiny proceedings, unless the delay is directly attributable to the taxpayer.

Why Refunds Are Taking Longer This Year

According to the latest data from the Income Tax Department (as on November 10, 2025), net direct tax collections have grown by 7% year-on-year but the refund payouts dropped by 18%.

Several reasons explain why processing is slower this year:

1. Mismatch of information between taxpayer's data and the department records

Errors in TDS/TCS credit continue to be the biggest reason for refund delays.

Mistakes such as:

• ·        TAN entered incorrectly
• ·        Wrong section codes
• ·        Mismatched challan details
• ·        Differences between gross and net interest
• ·        Inconsistencies between ITR, Form 26AS, AIS, and TIS

·        Most often result in the return being flagged for manual verification.

2. Filings Involving Foreign Income or High-Value Transactions

• ITRs involving foreign income, capital gains, multiple sources of income, transactions in mutual funds, or sale of property take longer to clear.
• There are still significant issues with FTC mismatches.
• Differences between information from AIS/TIS-particularly in interest, dividends, mutual fund redemptions, SFT-reported transactions, and capital gains-are cause for follow-up checks. Schedule FA reporting of foreign assets is equally rated as high-risk and prone to longer scrutiny.

3. Inoperative PANs, pending verification or scrutiny

Refunds are withheld when:

• ·        PAN is not linked to Aadhaar-hence inoperative
• ·        Bank accounts are not pre-validated
• ·        The taxpayer has outstanding demands that are older
• ·        Returns are not e-verified within 30 days.
• When PAN becomes inoperative under Rule 114AAA, it disrupts the entire processing chain-from TDS mapping to refund credit.

New Powers to CBDT to Expedite Correction of Errors

To reduce long-pending cases, CBDT issued Notification No. 155/2025, giving the Commissioner of CPC concurrent authority to rectify obvious errors and issue revised demand orders directly. According to experts, this will expedite the resolution of mismatches and facilitate faster processing of stuck refunds, as CPC is no longer required to wait for higher officers to approve corrections.

What Can Taxpayers Do if Their Refund Is Still Stuck?

If your refund continues to remain pending, the following remedies can help:

1. Submit a rectification request (under Section 154)

If the previous errors remain unrectified, submit a new online rectification request with updated documents.

2. Use the e-Nivaran grievance module

This portal will allow taxpayers to lodge detailed grievances, upload documents, and track progress.

3. Escalate through CPGRAMS

The Centralized Public Grievance Redress and Monitoring System often leads to quicker action because complaints reach higher-level officers.

4. Contact your jurisdictional Assessing Officer

A request in writing directly or a personal hearing may expedite the matter.

5. File a writ petition

If there is prolonged inaction or an unjustified delay, approaching the High Court is also a legally recognized remedy.

Conclusion:

• Wait for Refunds Can Be Frustrating, But Law Is Your Protector
• Although refund delays may be an inconvenience, taxpayers must remember that the law provides protection.
• If the delay is not your fault, then the Income Tax Department has to pay interest under Section 244A. This ensures that with correct disclosures, proper tracking of Form 26AS/ AIS/ TIS, and judicious use of the grievance channels, the taxpayer gets the refund amounts quicker along with interest payable to him.

Q&A on Income Tax Refund Delays and Interest (Section 244A)

Q1. Why are many taxpayers still waiting to get their income tax refund for FY 2024–25?

The main reason for these delays is that the Income Tax Department scrutinizes claims of deduction, mismatched disclosures, and suspicious refund requests in greater detail. The department has identified several wrong claims and has asked many individuals to file revised returns. Apart from this, technical issues and high-volume processing are additional reasons contributing to this delay.

Q2. What did the Chairman of CBDT say about delays in refunds?

CBDT Chairman Ravi Agrawal said the department has reached out to taxpayers where it suspects critical disclosures have been missed and requested them to file revised returns. He further reiterated that low-value refunds are being released and the remaining would be cleared by the end of November or December 2025.

Q3. Are taxpayers entitled to interest when refunds are delayed?

Yes, under Section 244A of the Income Tax Act, taxpayers are entitled to interest at 0.5% per month (6% yearly) on refunds delayed for reasons not caused by the taxpayer.

Q4. From when is the interest on delayed refunds calculated?

1.     For returns filed on or before September 16, 2025, interest is calculated from 1 April of the assessment year.

2.     Interest for belated returns would begin from the date of actual filing.

3.     The interest accrues right up to the refund date.

Q5. What if the delay was the fault of the taxpayer?

Interest for the period is not paid if the delay is attributed to the mistakes of the taxpayer, such as wrong details, mismatches in Form 26AS/AIS/TIS, late filing, late verification, or wrong bank details.

Q6. What are the most common reasons for refund delays this year?

Reasons for this delay in refunds include:

• ·        Mismatch between the income reported and as reflected in the Form 26AS, AIS, or TIS.
• ·        Incorrect details about TDS/TCS, wrong challans, and incorrect deduction claims
• ·        Foreign income or high-value transactions requiring additional verification
• ·        Inoperative PANs or bank accounts which are not prevalidated
• ·        ITRs selected for scrutiny or incomplete verification

Q7. How is interest on a delayed refund calculated?

·        The interest is calculated as 0.5% of the refund amount per month.

·        Suppose your refund of ₹ 20,000 is delayed by 6 months. Interest will be:

0.5% × 20,000 × 6 = ₹600.

Q8. Do refunds below ₹100 accrue interest?

No. As per the Income Tax Act, a refund of less than ₹100 is not entitled to interest.

Q9. What can taxpayers do in case of a refund stuck for months?

Taxpayers can:

1.     File a rectification request (Section 154) for errors

2.     Use the grievance module e-Nivaran

3.     Escalate through CPGRAMS

4.     Contact the jurisdictional Assessing Officer

5.     Request a personal hearing

6.     File a writ petition in the High Court if delays are excessive

Q10. Does scrutiny automatically stop refund interest?

No. Even if your case goes into scrutiny, interest will continue to accrue unless the delay is directly due to the taxpayer's fault.

Q11. Can foreign income or high-value transactions delay refunds?

Yes, ITRs relating to foreign income, foreign tax credits, property transactions, capital gains, or mutual fund dealings often need further verification, which delays the refunds significantly.

Q12. What new measures has CBDT introduced to expedite the processing of refunds?

The CBDT issued Notification No. 155/2025, empowering the Commissioner of CPC with more powers to rectify errors swiftly and issue revised orders. It reduces dependence on higher officers and thus increases speed in the processing of long-pending cases.

Q13: If my refund is delayed, what should I check first?

Check the following:

1.     Whether your PAN is operative

2.     Whether your bank account is pre-validated

3.     If your Form 26AS, AIS, and TIS match your ITR

4.     Whether any outstanding tax demand exists

5.     If your ITR is properly verified

Q14. Is interest on refund paid automatically by the Income Tax Department?

Yes. Interest under Section 244A is calculated and credited automatically to your refund before the refund is issued. You do not need to make a separate application for it.

Q 15. Should I add the interest received in my income?

Yes. Interest on refund is taxable under the head “Income from Other Sources” and is required to be included in the year in which it is received.