Income Tax Refund: These are some of the reasons given by the Income Tax Department for the increase in text messages and emails sent to taxpayers this month.
Generally, according to the information given on the official portal of the Income Tax Department, it takes 4-5 weeks for the refund to be credited to the taxpayer’s account. According to this timeline, most of the income tax refunds should have been issued by the end of October, as the filing deadline for individuals and non-audit cases was September 16. About 95 percent of all returns filed are filed by individuals.
Income tax refund is issued if the tax paid through TDS, TCS, advance tax or self-assessment tax is more than the actual amount payable after taking into account all deductions and exemptions.
Why is the income tax refund getting delayed this year?
According to the Income Tax Department, through the “Risk Management Framework”, some taxpayers have been identified who are claiming “wrongful refunds” by using deductions or exemptions to which they are not entitled. The department said that this has led to the problem of “underreporting of income”.
The Income Tax Department has detected several major irregularities:
1. “Fake” donations to Registered Unrecognized Political Parties (RUPPs), in some cases involving false PAN cards of donors.
2. Mismatch between Tax Deducted at Source (TDS) and Annual Information Statement (AIS), resulting in excess income.
3. Large deductions or incorrect claims.
4. Not disclosing foreign assets or income.
Earlier, in a statement issued on December 13, the Central Board of Direct Taxes (CBDT), the largest body of the Income Tax Department, had said that it has taken action against many middlemen who were claiming wrong deductions and exemptions while filing income tax returns.
“This investigation has revealed that some middlemen have created a network of agents across India to file fraudulent claims on commission basis,” the statement said. Sources said data analytics have flagged over 200,000 taxpayers who had claimed suspicious deductions under Section 80GGC amounting to nearly ₹5,500 crore, which were made through dubious or non-existent registered political parties (RUPPs) and charitable organizations.
Similarly, many taxpayers also received emails from the department asking them to file correct details of their foreign income and assets and revise their returns by December 31. “…US authorities have shared data that shows whether you held or earned foreign assets or income (like bank accounts, interest, dividends, investments) during calendar year 2024. However, the assessment year Scheduled foreign assets were not included in your ITR for 2025-26,” one such email said.
Non-disclosure of foreign income may attract penalty under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Investigation of unusual cases, high-value refunds
Some strange cases have also come to light. Some taxpayers have reported that they have received messages despite not claiming any deduction or exemption, while others said that they have not received any SMS/email, but their refunds have been withheld. Many taxpayers have received SMS messages even after choosing the new tax system in which no deduction or exemption is available except the standard deduction.
Sources close to the tax department said that in some cases SMS or emails were sent because there were other discrepancies, even if no deduction or exemption was claimed. For example, a taxpayer working for a contractor had TDS deducted under the Professional Services category, but the return filed was ITR-1 for salary income and not business income. Therefore, an email was sent to the taxpayer asking him to revise his return.
Refunds of large amounts, especially those above ₹50,000, are being scrutinized and taxpayers have been complaining of delays in refunds after the September 16 deadline. Many of them have also said that due to non-receipt of refund, they are facing financial liquidity problems to meet household expenses.
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