Why Are Income Tax Refunds Delayed This Year? Experts Explain the ITR Filing Slowdown

July 13, 2025: More than 1.16 crore income tax returns (ITR) have been filed so far for the assessment year 2025–26, with approximately 1.09 crore returns verified, according to the Income Tax Department. However, these figures could have been significantly higher if the filing process had started on time — unlike the nearly two-month delay witnessed this year.

The department released the necessary ITR utilities only at the end of May, with ITR-1 and ITR-4 forms becoming available on May 30, followed by ITR-2 and ITR-3 utilities on July 11. This delayed start has caused setbacks in filing timelines and has pushed back the overall processing schedule.

Experts Warn of Delays and Stricter Refund Assessments

There is growing anxiety among taxpayers — both those awaiting refunds and those yet to file — amid concerns that income tax refunds may face delays this year. Taxation expert CA (Dr.) Suresh Surana explains that a combination of technical delays and procedural changes are responsible.

“The late release of ITR utilities delayed the entire filing process,” said Dr. Surana. “Additionally, major changes in income tax rules, announced in the July 2023, July 2024, and February 2025 budgets, have made the return process more complex.”

These changes include making the new tax regime the default, expanding the scope of information required in ITR forms, enhancing the Annual Information Statement (AIS) and Form 26AS data integration, and enforcing stricter data matching procedures.

Incomplete Utility Releases and Extended Deadlines

Unlike previous years, where all ITR form utilities were released by April or May, this year only the utilities for ITR-1, 2, 3, and 4 have been made available so far. Utilities for ITR-5, 6, and 7 remain unreleased, leaving several categories of taxpayers unable to file.

In light of these delays, the government extended the filing deadline from July 31 to September 15, 2025, giving taxpayers additional time to complete their returns.

Data Matching and Refund Withholding

The Income Tax Department has stepped up its scrutiny by thoroughly matching data reported in ITRs with third-party sources such as AIS and Form 26AS. Any mismatch or inflated refund claims trigger system flags that delay refund processing.

Dr. Surana notes, “This year, the department is more vigilant, which means taxpayers may face longer wait times for refunds, especially if their returns require additional verification.”

What Taxpayers Should Do

Experts advise taxpayers to file their returns as soon as possible, ensure all information matches third-party data, and maintain patience amid these systemic delays.

The department continues to work on releasing remaining ITR utilities and processing pending returns. Updates on refund disbursal timelines are expected as the filing season progresses.