ITR refund stuck? Experts warn December 31 delays could block revisions

'Act fast: Rectification can save your refund if ITR isn't processed by year-end,' say experts

Taxpayers expecting an income tax refund for assessment year 2025-26 face a tight window if their return is processed late

 

by the Income Tax Department. While 31 December 2025 is the last date to file a revised return, many original returns are still pending with the Centralised Processing Centre (CPC). If processing happens after this date and an error is flagged, fixing it becomes far more complicated, especially if a refund is involved.

 

Why CPC flags errors after processing

Once an income tax return (ITR) is processed, the CPC cross-checks it with data from Form 26AS, the annual information statement (AIS) and tax information summary (TIS). Even small mismatches can lead to refund delays or reductions.

 

 

Routine issues include TDS or TCS mismatches, unreported interest income, incorrectly reported capital gains, or errors in deduction schedules. Many taxpayers rely entirely on pre-filled data, which is not always accurate, said Parag Jain, tax head at 1 Finance. Because CPC processing is fully system-driven, even minor discrepancies can turn genuine refunds into tax demands, holding up payouts for months.

 

Ritika Nayyar, partner at Singhania & Co., added that failures such as not pre-validating bank accounts, incomplete schedules for deductions like donations, or simple arithmetical errors can also delay processing or lower the expected refund.

 

Revised return vs rectification vs ITR-U

If an ITR is processed after 31 December 2025 and shows an error, taxpayers can no longer file a revised return. The remedy depends on the nature of the mistake. 

A rectification request under Section 154 should be used where the return was filed correctly but the CPC made a clerical or system error-- such as ignoring a TDS credit already reflected in Form 26AS, Jain explained. Rectification is meant to fix mistakes apparent from the record, not omissions by the taxpayer. 

An updated return or ITR-U, on the other hand, applies only when income was underreported and additional tax is payable.

 

Nayyar pointed out that ITR-U cannot be filed to increase a refund or reduce tax liability and also attracts extra tax and interest.

 

For genuine refund cases wrongly denied by CPC, rectification is often the only workable option.

 

What to do if your refund is still pending

 

If your return remains unprocessed close to or beyond 31 December 2026, the statutory deadline for CPC processing, experts advise a structured approach:

 

Recheck e-verification status and bank account validation on the portal

 

Look for any pending actions or notices

 

File an online grievance through e-Nivaran

 

Escalate the issue to the jurisdictional assessing officer if delays persist

 

These steps help establish that the delay is departmental, not taxpayer-driven, Jain said.

 

Is there a real risk of losing refunds?

Experts warn that the risk is significant. Delayed processing can deny taxpayers the opportunity to revise returns, even when errors are minor. There is no explicit legal protection against refund loss caused solely by departmental delay, Jain noted.

 

Existing safeguards, such as rectification, grievance redressal, and CBDT’s condonation powers, offer relief, but they are reactive rather than preventive.

 

For taxpayers with refund claims, the message is clear, monitor processing closely and act early, because after 31 December 2025, options narrow sharply.