Taxpayers face long refund delays: FY25 sees steep 38% drop in payouts, slow processing
Tax practitioners attribute the slump to a combination of delayed ITR form releases, tighter verification rules, and processing bottlenecks at the Centralised Processing Centre (CPC) in Bengaluru.
- Dec 4, 2025,
- Updated Dec 4, 2025 2:35 PM IST
Delays in income tax refunds have become a major pain point for taxpayers in FY 2024–25, with a significant slowdown visible across categories—especially high-value claims. Many individuals say even basic returns are taking far longer than usual to move through the processing cycle. Official data underscores the scale of the problem: personal income tax refunds issued up to early November fell to ₹88,548 crore, sharply lower than ₹1.42 lakh crore in the same period last year, marking a 38% year-on-year drop.
Tax practitioners attribute the slump to a combination of delayed ITR form releases, tighter verification rules, and processing bottlenecks at the Centralised Processing Centre (CPC) in Bengaluru. Officials indicate that while smaller refunds are being cleared relatively quickly, large refunds are undergoing enhanced scrutiny, slowing the overall pace.
The most severe delays are seen in refunds above Rs 30,000, where tax professionals say a “majority remain stuck.” Internal estimates they cite suggest that refunds for non-corporate taxpayers have fallen sharply, forming the bulk of the decline.
One of the structural triggers was the late rollout of ITR forms this year. Several forms that were available in April last year were released months later in 2024, pushing back filing timelines for millions. With the filing calendar compressed, the processing window for returns requiring additional checks has shrunk dramatically, creating a cascading delay.
Compliance-related mismatches are adding to the backlog. Many salaried taxpayers filed for large refunds after employers deducted excess TDS under Section 192 due to late submission of investment declarations. Such mismatches often trigger manual verification. Returns involving loss carry-forward, substantial TDS refunds, or inconsistent figures compared with Form 26AS or AIS are undergoing deeper scrutiny under revised risk-based selection rules.
The pressure has intensified as the system handles record filing volumes. Over eight crore returns were filed by the end of November, with an expected surge as the audit-return deadline, extended to December 10, approaches. Professionals say that the late arrival of ITR forms disrupted the entire compliance calendar, particularly affecting taxpayers expecting refunds or filing rectifications.
Many refund delays, however, stem from avoidable taxpayer errors. Common issues include incorrect or inactive bank account details, selecting the wrong ITR form, mismatches in TDS/TCS data, failing to e-verify returns, or claiming deductions that the system flags as ineligible. Any of these can trigger a hold on refund issuance until the discrepancy is resolved.
Adding to the frustration is the lack of transparency on the portal regarding processing stages. Tax practitioners say they are unable to give clients definitive timelines because the system offers limited visibility into why a refund is delayed. Users report that grievances raised on the e-filing portal have resulted in generic responses, prompting calls for a real-time refund tracker to reduce uncertainty during the prolonged wait.
How to check refund status using PAN
Taxpayers can check their refund status easily through the Income Tax Department’s e-filing portal. After logging in with PAN and password, go to e-File → Income Tax Returns → View Filed Returns, select the assessment year, and click View Details. The portal will display the current refund status, approved amount, mode of payment, and date of credit if processed.
Delays in income tax refunds have become a major pain point for taxpayers in FY 2024–25, with a significant slowdown visible across categories—especially high-value claims. Many individuals say even basic returns are taking far longer than usual to move through the processing cycle. Official data underscores the scale of the problem: personal income tax refunds issued up to early November fell to ₹88,548 crore, sharply lower than ₹1.42 lakh crore in the same period last year, marking a 38% year-on-year drop.
Tax practitioners attribute the slump to a combination of delayed ITR form releases, tighter verification rules, and processing bottlenecks at the Centralised Processing Centre (CPC) in Bengaluru. Officials indicate that while smaller refunds are being cleared relatively quickly, large refunds are undergoing enhanced scrutiny, slowing the overall pace.
The most severe delays are seen in refunds above Rs 30,000, where tax professionals say a “majority remain stuck.” Internal estimates they cite suggest that refunds for non-corporate taxpayers have fallen sharply, forming the bulk of the decline.
One of the structural triggers was the late rollout of ITR forms this year. Several forms that were available in April last year were released months later in 2024, pushing back filing timelines for millions. With the filing calendar compressed, the processing window for returns requiring additional checks has shrunk dramatically, creating a cascading delay.
Compliance-related mismatches are adding to the backlog. Many salaried taxpayers filed for large refunds after employers deducted excess TDS under Section 192 due to late submission of investment declarations. Such mismatches often trigger manual verification. Returns involving loss carry-forward, substantial TDS refunds, or inconsistent figures compared with Form 26AS or AIS are undergoing deeper scrutiny under revised risk-based selection rules.
The pressure has intensified as the system handles record filing volumes. Over eight crore returns were filed by the end of November, with an expected surge as the audit-return deadline, extended to December 10, approaches. Professionals say that the late arrival of ITR forms disrupted the entire compliance calendar, particularly affecting taxpayers expecting refunds or filing rectifications.
Many refund delays, however, stem from avoidable taxpayer errors. Common issues include incorrect or inactive bank account details, selecting the wrong ITR form, mismatches in TDS/TCS data, failing to e-verify returns, or claiming deductions that the system flags as ineligible. Any of these can trigger a hold on refund issuance until the discrepancy is resolved.
Adding to the frustration is the lack of transparency on the portal regarding processing stages. Tax practitioners say they are unable to give clients definitive timelines because the system offers limited visibility into why a refund is delayed. Users report that grievances raised on the e-filing portal have resulted in generic responses, prompting calls for a real-time refund tracker to reduce uncertainty during the prolonged wait.
How to check refund status using PAN
Taxpayers can check their refund status easily through the Income Tax Department’s e-filing portal. After logging in with PAN and password, go to e-File → Income Tax Returns → View Filed Returns, select the assessment year, and click View Details. The portal will display the current refund status, approved amount, mode of payment, and date of credit if processed.