Key Points
- Out of 8.80 crore ITRs filed for AY 2025-26, approximately 8.02 crore have been processed, leaving 63 lakh pending
- Income Tax Department has up to December 31, 2026, to process returns under law, making delays legally permissible
- CBDT’s “nudge” campaign deliberately holds refunds where mismatches are detected, asking taxpayers to file revised returns
- High-value refunds and claims beyond Form 16 (HRA, 80C deductions) face manual verification and extended scrutiny
- Advanced data analytics cross-checks ITR data with TDS, AIS, Form 26AS, bank details, and SFT, flagging mismatches automatically
- Late release of ITR forms (June to August 2025) and portal glitches contributed to processing delays this year
- Over 90% of verified returns already processed, indicating system is functioning within legal parameters
Did you file your Income Tax Return on time but still haven’t received your refund? You’re not alone, as more than 63 lakh taxpayers across India are waiting for their ITRs to be processed for Assessment Year 2025-26. According to data on the Income Tax Department’s website, approximately 8.80 crore ITRs have been filed so far, of which around 8.66 crore have been verified and about 8.02 crore have been processed, leaving roughly 63 lakh returns still under processing.
Many taxpayers who check their bank balances daily, hoping for refunds, are growing concerned, especially after the December 31 deadline passed. However, tax experts emphasise that this delay is largely due to deliberate compliance measures and stricter data verification protocols, rather than system failure or processing backlogs.
Legal Timeline Allows Processing Until December 2026
According to tax law, pending returns even after December 31 are not necessarily a cause for alarm. Under the Income Tax Act, the Centralised Processing Centre (CPC) has up to nine months after the end of the financial year to process returns. For returns related to AY 2025-26 (FY 2024-25), the department has until December 31, 2026, to complete processing.
The fact that over 90% of verified returns have already been processed indicates the situation remains within legal limits and the system is functioning as intended. Tax experts note that the unusually large number of unprocessed returns is largely a byproduct of the Income Tax Department’s expanded use of data analytics and pre-emptive compliance checks, rather than manpower shortages or portal breakdowns.
CBDT’s “Nudge” Campaign Deliberately Holds Refunds
One major reason many refunds are stuck is the CBDT’s “nudge” campaign, launched in December 2025. Under this initiative, taxpayers whose returns show mismatches with third-party data are being proactively informed via SMS or email and allowed to accept the difference or file a revised or updated return.
Until such corrective action is taken, the department has consciously kept processing of these returns in abeyance, meaning the tax department is pausing refunds on purpose to give taxpayers a chance to correct errors before money is paid out or tax demands are raised. CBDT Chairman Ravi Agrawal stated that delays in refunds are primarily due to analysis of high-value or flagged claims, while low-value refunds are being processed normally, with legitimate payouts expected by December.
High-Value Refunds Face Manual Verification
This year, the department is scrutinising refunds more closely, especially those involving large amounts or cases where taxpayers have claimed deductions such as HRA and Section 80C beyond what is mentioned in Form 16. The department wants to ensure these claims are not fraudulent or erroneous before releasing funds.
Tax expert Sandeep Bhalla from Dhruva Advisors explains that the Income Tax Department has intensified risk-based reviews, with returns involving large or unusual refund claims being flagged for manual verification. Automated risk filters and mismatches with the Annual Information Statement (AIS) or Form 26AS are leading to processing delays and revision prompts.
Advanced Data Analytics Cross-Checks Multiple Sources
The primary reason for the higher number of pending returns this year is advanced data analytics and risk-based processing. The Income Tax Department now has access to extensive third-party information, including Tax Deducted at Source (TDS) data, Annual Information Statement (AIS), Form 26AS, bank account details, mutual fund transactions, and Statement of Financial Transactions (SFT).
If the information provided in the ITR does not completely match this data from multiple sources, the return is automatically flagged by the system, which slows down processing. Experts note that even otherwise straightforward salaried returns may face delays if the underlying data does not fully align, meaning the delay is risk-based rather than category-based.
Late ITR Forms And Portal Issues Added To Delays
Operational factors also contributed to slower processing this year. For AY 2025-26, several ITR forms and utilities were released later than usual, stretching from June to August 2025, which delayed both filing and processing cycles. New return forms and utility updates were released weeks later than in prior years, pushing back filing and processing schedules significantly.
Additionally, the portal’s backend experienced limited glitches, and heavy traffic near deadlines caused login timeouts and technical issues in certain cases. Typically, refunds are credited to taxpayer accounts within 4 to 5 weeks after e-verification, but for AY 2025-26, over 90 days have lapsed in many cases where refunds are still awaited.
