With the income tax filing deadline for assessment year 2026-27 now passed, the tax department is actively processing returns. While most refunds are issued smoothly, some taxpayers face delays due to automated verification checks. Understanding common triggers like data mismatches and pending e-verification is essential for taxpayers to monitor their status and resolve potential issues quickly.
Following the conclusion of the income tax filing season for the 2026-27 assessment year, the Income Tax Department’s Central Processing Centre is currently in the high-volume phase of verifying and processing returns. While most taxpayers receive their refunds without issue, an increasing number are receiving notices or experiencing delays. These delays often stem from the department's enhanced, AI-driven verification systems that cross-reference filed returns with third-party data to detect anomalies.
Data Mismatches with Official Records
One of the most frequent reasons for a refund delay is a discrepancy between the income reported in a tax return and the data available in the department’s systems. The tax authorities cross-check filings against the Annual Information Statement, the Taxpayer Information Summary, and Form 26AS. If a taxpayer fails to report income from sources such as interest on savings accounts, dividends, or capital gains, or if the reported TDS amounts do not match what is recorded in the department’s database, the automated system often flags the return for review. These mismatches typically result in a notice requesting clarification or documentation.
Missing E-Verification and Validation
An often-overlooked step that stops the refund process is the failure to complete e-verification. Simply uploading a return is not enough; the verification process must be completed within the stipulated time frame for the return to be considered valid and processed. Additionally, incorrect or unvalidated bank account details can halt a refund. The tax department only credits refunds to pre-validated bank accounts linked with a Permanent Account Number. If the details provided during filing are incorrect or if the account has not been validated on the e-filing portal, the refund will not be credited, leading to further administrative delays.
Outstanding Demands and Scrutiny
Taxpayers who have outstanding tax demands from previous financial years may find their current refunds adjusted against those older, unpaid liabilities. Under Section 245 of the Income Tax Act, the department can adjust a refund against an existing demand, provided they issue an intimation to the taxpayer first. Furthermore, returns flagged for manual scrutiny can also lead to delays. This often happens when taxpayers claim excessive deductions under sections like 80C or 80D without supporting documents, or when they report significant high-value transactions—such as large property purchases or major investments—that appear inconsistent with their reported income. In such cases, the department issues notices seeking proof or further justification.
To manage these risks, taxpayers should not rely solely on email notifications. It is advisable to regularly log in to the official income tax e-filing portal and check the Pending Actions and e-Proceedings sections. Monitoring these dashboards allows taxpayers to see if any response is required, helping them address issues proactively rather than waiting for formal correspondence. Timely responses to these notices are critical to preventing further delays in receiving refunds.