ITR refund pending? Tax dept legally has time until 2025 to process it

Processing time varies due to factors like form type, complexity, number of deductions/exemptions

The Income Tax Department is processing millions of returns – a task that can take until the end of 2025 to complete for some taxpayers.

 

“The Income Tax Department generally aims to process Income Tax returns and issue refunds within 20 to 45 days after an ITR is verified. However, the department is legally required to process the return and issue any refund within a reasonable time frame, generally not exceeding nine months from the end of the financial year in which the return was filed,” said Amit Bansal, a chartered accountant and partner - direct tax at Singhania & Co.

 

"In some cases, particularly where the return is considered critical or complex, the processing time can extend up to one year based on personal experience. If the refund is delayed beyond these periods, the taxpayer is entitled to receive interest on the refund amount as per Section 244A of the Income Tax Act,” he said.

 

Interest on Income Tax refund

Tax refunds accrue interest at a rate of 0.5 per cent per month or part thereof for any delay.

Upon the successful processing of the tax return, you will receive a notice under section 143(1), which will confirm the details, including the total amount of any tax refund due. However, if the refund is less than 10 per cent of the tax determined under section 143(1) or during regular assessment, no interest will be paid on the refund.

In cases where refunds are due to overpaid advance tax or TDS, interest is computed from the start of the assessment year until the refund is approved. For other situations, such as refunds resulting from rulings made by tax authorities, interest is calculated from the date the tax was paid to the date the refund is provided.

If an ITR isn't processed for long, taxpayers can lodge a complaint using the "grievance tab" at the Income Tax department’s website. Additionally, they can contact the central processing centre’s helpline numbers.

Taxpayers who have missed the July 31 deadline can file a belated return on or before December 31, 2024. “The belated return will attract interest under section 234A and 234B on unpaid tax liability along with late fees. In case, a taxpayer misses the timeline of belated return also, he can file updated tax return,” said Gopal Bohra, partner, direct tax, at N A Shah Associates LLP.

How to check ITR refund

 

The ITR process can be tracked at the websites of National Securities Depository Limited (NSDL) and Income Tax Department.
 

Checking refund status from the income tax e-filing portal

 

Go to the official Income Tax e-filing website.

Log in with your PAN details.

Once logged in, locate and click on the ‘My Account’ section.

Click on the “Refund/Demand Status” button.

You will see the status of your income tax refund, including details such as the assessment year, current status, reasons for any refund failures, and mode of payment.

Checking refund status at NSDL website

 

Visit the NSDL website.

Log in with your PAN details.

Choose the assessment year for which you want to check the refund status from the dropdown menu.

Enter the captcha code displayed on the screen.

After entering the captcha, click the ‘submit’ button.

A message will appear on your screen, indicating the status of your ITR refund.

Click 'Proceed' to view your refund status