Even after more than eight crore income tax returns (ITRs) being processed in AY 2025-26, over 50 lakh taxpayers are still waiting for their returns to be taken up — and for refunds to be released.
Data available with the Income-tax Department shows that as of January 11, around 8.8 crore ITRs have been filed for AY 2025–26. Of these, 8.68 crore returns have already been verified, and 8.15 crore returns have been processed. This leaves nearly 53 lakh returns still pending for processing, many of which are linked to refund claims.
So why is the process taking longer this year?
Key reason: Heightened scrutiny and risk-based checks
According to tax expert CA Dr Suresh Surana, the primary reason for the slowdown is tighter scrutiny by the tax department, especially in cases involving refunds.
“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 AIS/Form 26AS are leading to processing delays and revision prompts,” Surana explains.
This year, the department has significantly increased the use of data analytics and automated risk filters. Returns showing income mismatches, tax credit differences, or unusually high refund claims are being picked up for closer examination, slowing down automated processing.
NUDGE initiative adds another layer of verification
Surana also points out that refund delays are being driven by the second phase of the NUDGE initiative launched by the Central Board of Direct Taxes.
Under this initiative, tax authorities are using AEOI (Automatic Exchange of Information) data for FY 2024–25 to identify cases where foreign assets or overseas income may not have been disclosed in ITRs for AY 2025–26.
Taxpayers identified under this exercise have been receiving SMS and email alerts since November 28, 2025, asking them to review and revise their returns by December 31, 2025 to avoid penal consequences. Returns flagged under this exercise are being processed more cautiously, contributing to delays.
Other reasons why ITR processing is slower this year
Apart from enhanced scrutiny, experts say a few other factors are also affecting the pace of refunds:
Higher volume of filings closer to deadlines: The ITR due date for AY 2025–26 was extended twice — first from July 31 to September 15, and then by another day till September 16, 2025. This led to a heavy filing rush in September, increasing the processing backlog.
AIS and Form 26AS mismatches: Differences between income declared by taxpayers and data reported by banks, employers, and mutual funds are triggering system alerts.
Manual intervention in select cases: Refund-heavy or complex returns are increasingly being taken out of the automated queue for officer-level checks.
What about taxpayers who missed the deadline?
The last date to file a belated return for AY 2025–26 ended on December 31, 2025. However, taxpayers still have one option left — filing an updated return, though with restrictions.
How to file an updated ITR for AY 2025–26
Taxpayers who missed earlier deadlines or need to correct errors can file an updated return under Section 139(8A). Here’s how it works:
-Updated returns can be filed within 48 months from the end of the relevant assessment year
-They can be used to declare missed income or correct mistakes
-However, updated returns cannot be filed to claim or increase refunds
-Additional tax, interest, and penalty (up to 50% of tax due, depending on timing) may apply
-Updated returns are not allowed in cases involving searches, surveys, or prosecution proceedings
Experts advise taxpayers to carefully review AIS and Form 26AS data before filing an updated return to avoid further notices or delays.
What should taxpayers waiting for refunds do now?
For those whose returns are already filed but not yet processed, experts suggest:
-Regularly check the ITR status on the income tax portal
-Ensure bank account validation is complete
-Respond promptly to any email or SMS alerts from the department
-File a revised return, if permitted, in case of genuine data mismatches
With tighter compliance checks becoming the norm, refund timelines may remain stretched, but experts say accurate filings and timely responses can help taxpayers avoid prolonged delays.