Income Tax Refund Delayed 2026: Reasons, Solutions, and Status Check

Latest Update (January 2026): If you filed your Income Tax Return (ITR) for the Assessment Year 2025-26 and are still waiting for your refund in January 2026, you are not alone. Recent reports indicate a significant number of taxpayers are facing delays this year due to stricter verification processes by the Income Tax Department.

Many taxpayers usually expect their refunds within 20 to 45 days of e-verification. However, this year, the timeline has stretched for months for thousands of individuals. This article explains the real reasons behind the delay, the official rules regarding processing time, and the steps you must take immediately to ensure your money reaches your bank account.

Why Are Refunds Delayed This Year?

The delay is not necessarily a technical glitch. In many cases, it is a deliberate move by the Central Board of Direct Taxes (CBDT) to prevent tax leakage. Here are the primary reasons why your status might still be showing as “Under Processing”:

1. Stricter AI-Based Scrutiny

The Income Tax Department is now using advanced Artificial Intelligence and data analytics to process returns. The system automatically cross-checks your declared income and deductions against the Annual Information Statement (AIS) and Form 26AS. If there is even a small mismatch—for example, between the interest income you declared and what your bank reported—the system halts the refund for manual verification.

2. The “Risk Management” Checks

This year, many taxpayers received an email asking them to “Confirm” their refund claim. This is part of the department’s risk management system. If you claimed high deductions (like HRA or donations) that do not match your profile, the department puts a hold on the refund until you log in to the portal and confirm that your claims are genuine.

3. Outstanding Tax Demands

If you have any unpaid tax dues from previous years (e.g., 2022 or 2023), the department may adjust your current refund against those old dues under Section 245. You would typically receive an intimation notice before this happens.

4. Bank Account Validation Issues

This is a common administrative error. Your refund can only be credited if your bank account is “Validated” and “EVC Enabled” on the income tax portal. If your bank merged recently (causing an IFSC change) or if your name in the bank records does not exactly match your PAN card, the credit will fail.

The Official Processing Deadline

It is important to know the legal limit. According to tax laws, for returns filed for AY 2025-26, the Income Tax Department legally has time until December 31, 2026, to complete the processing under Section 143(1).

While the department usually processes returns much faster, they are not technically “late” until this deadline passes. However, if the delay is on their end, they are liable to pay you interest.

Will You Get Interest on the Delayed Refund?

Yes, there is a silver lining. If the department delays your refund, you are entitled to interest under Section 244A of the Income Tax Act.

• Interest Rate: 0.5% per month (or part of a month).
• Calculation: Interest is calculated from April 1st of the assessment year (if filed on time) to the date the refund is granted.
• Condition: You will strictly not get interest if the delay is your fault (e.g., if your bank account was not validated, or you delayed e-verification).

How to Check Your Refund Status

Do not just wait for an SMS. Log in and check the specific status using these steps:

1. Go to the official e-filing portal: incometax.gov.in.
2. Login with your PAN and Password.
3. Go to e-File > Income Tax Returns > View Filed Returns.
4. Check the status tab.
   • “Processed with Refund Due”: Good news. The work is done, and payment is pending.
   • “Under Processing”: The system is still checking your data.
   • “Defective”: There is an error you need to fix immediately.

What You Must Do Now (Action Items)

If your status has been stuck for months, follow this checklist:

• Check “Worklist”: Login to the portal and look at the “Pending Actions” or “Worklist” tab. If the department has asked for a “Response to Refund Confirmation,” you must submit it immediately. The refund will never be issued until you do this.
• Re-validate Bank Account: Ensure your bank account shows a green “Validated” tick mark on your profile.
• Check Email for Notices: Search your inbox for “Section 139(9)” (Defective Return) or “Section 245” (Demand Adjustment) notices. These require a reply within 15 to 30 days.
• Raise a Grievance: If everything looks correct and months have passed, submit a grievance on the portal under “Refund not received.”

FAQs on Tax Refund Delays