ITR Refund: Know four types of income tax refund status and reasons behind delay

Income Tax Return: Filing an Income Tax Return (ITR) is an essential responsibility for taxpayers in India, as it enables them to report their annual income, claim deductions, and pay any tax liabilities owed to the government. The process involves submitting a detailed statement of income from various sources such as salary, business, investments, and other earnings for a given financial year. The due date for filing ITRs generally falls on July 31 for individual taxpayers, with extensions sometimes granted. Filing an ITR is mandatory for individuals whose income exceeds the basic exemption limit, which varies based on age and other criteria.

The Income Tax Department reported that a staggering 7.28 crore income tax returns (ITR) were filed this year by the deadline of July 31, 2024. Notably, around 5 crore of these returns were filed by July 26, 2024, which shows a surge in the last few days before the deadline. This surge led to an additional 2.28 crore ITRs being filed between July 27 and July 31, 2024. The Income Tax (I-T) department usually processes ITR refunds within 4-5 weeks of filing the income tax return. Taxpayers receive notifications from the department regarding the status of their ITR refunds. Once the refund is processed, a notice under Section 143(1) of the I-T Act is issued to the taxpayer.

Here are types of ITR refund status messages

Refund issued: You will receive this message if your ITR refund has been successfully processed and credited to your specified bank account.

Partially adjusted refund: If there is an outstanding tax demand from previous assessment years, the I-T department may send a notice under Section 245 of the I-T Act. Taxpayers are required to respond to this notice, as failure to do so may result in a partial deduction of their refund.

Complete deduction: If the I-T department identifies an outstanding demand and decides to adjust the refund for the current assessment year against that demand, a notice under Section 245 will be issued. If the taxpayer does not respond to this notice, the department will proceed with a complete adjustment of the refund against the outstanding demand.

ITR refund failed: Your ITR refund may have failed if there were errors in the bank details provided by you.

Possible reasons behind ITR delay

As per the income tax regulations, taxpayers are required to verify their ITRs within 30 days from the date of filing, either through the e-verification process or by submitting the ITR-V (Verification) form through the offline mode. If your Income Tax Return (ITR) hasn't been processed yet, there could be several reasons for the delay. Here are some common factors:

Incomplete information: If any details in your ITR are incomplete or incorrect, such as mismatches between PAN, Aadhaar, or bank account details, it may delay processing.

Verification pending: After filing your ITR, it needs to be verified either online (via Aadhaar OTP, net banking, etc.) or by sending a signed ITR-V to the Centralised Processing Centre (CPC) in Bengaluru. If you haven’t completed this step, your ITR won’t be processed.

Manual processing requirement: Sometimes, ITRs that involve complex cases like high-value transactions or claims for large refunds require manual processing, which takes more time.

High traffic: During peak filing periods, the Income Tax Department may be overwhelmed with a large volume of ITRs, leading to delays in processing.