Income tax refund delay: Why lakhs of taxpayers are still waiting and what the rules say

Many taxpayers who filed ITRs for FY 2024–25 (AY 2025–26) are still waiting for refunds. However, such delays are not uncommon and do not always indicate an issue with the return. Processing timelines can vary depending on multiple factors.

The Income Tax Department can process returns and issue refunds up to December 31, 2026. This means refunds for AY 2025–26 are still within the legally allowed time frame.

According to the Income Tax portal and as of January 19, 2026:
13.67 crore registered users
8.82 crore ITRs filed
8.69 crore verified
8.17 crore processed out of 8.69 crore ITRs verifiedDespite this, lakhs of taxpayers are still awaiting refunds.

When it comes to income tax refunds, things can take a bit longer if you’re dealing with high-value claims. That’s because these returns go through extra automated checks and validations. Sometimes, refunds might even be temporarily withheld or adjusted under Section 245(2), which permits the Income Tax Department to set off refunds against outstanding tax demands.
While Section 245(2) can lead to delays, often the reason for the holdup isn’t system-driven but rather simple mistakes made by the taxpayers themselves.

The Centralised Processing Centre (CPC) must process an ITR filed in FY 2025–26 (relevant to AY 2025–26) and issue an intimation under Section 143(1) within 9 months from the end of the financial year in which the return is filed.

Regardless of whether the Income Tax Return (ITR) is filed on July 31, 2025, September 16, 2025, or even as a belated return on December 31, 2025, the CPC is permitted to process the return up to December 31, 2026.
If the CPC fails to process the return within this statutory time limit, it no longer has the legal authority to issue an intimation under Section 143(1) thereafter.