Whalesbook
E-Verification and Data Alignment Crucial for Refunds
The Income Tax Department's advanced processing for Assessment Year 2026-27 returns requires taxpayers to be diligent to ensure timely refunds. E-verification of the Income Tax Return (ITR) is a critical, often overlooked, step. Without this digital confirmation, the ITR is incomplete, halting any refund. If e-verification is done more than 30 days after submission, the effective filing date is retroactively changed. This could lead to penalties under the Income Tax Act of 1961, as the new Income Tax Act of 2025 does not apply to these filings. Prompt reconciliation of financial data is therefore essential.
Correct Bank Details and Information Mismatches
Refunds are sent only to bank accounts linked to a Permanent Account Number (PAN) and that have been validated. Errors in the bank account number, IFSC code, or directing refunds to closed accounts will cause failed transactions. Refund delays are often triggered by differences between income, Tax Deducted at Source (TDS), or other financial figures reported in the ITR and the data in the Annual Information Statement (AIS) or Form 26AS. It is strongly recommended that all taxpayers carefully check and reconcile these figures before filing.
Scrutiny of Incorrect Claims and Form Selection
Submitting claims for TDS amounts not shown on Form 26AS, or overstating deducted tax, can significantly complicate ITR processing. A common mistake, especially for first-time filers, is choosing the wrong ITR form. For example, using ITR-1 when ineligible (e.g., due to capital gains or foreign assets) results in a defective return notice. Similarly, claiming deductions without proper documentation or alignment with Form 16 details can attract departmental scrutiny and delays. Even minor errors, like not declaring savings account interest (despite the Section 80TTA deduction), can create discrepancies that lead to processing issues.
Responding to Departmental Communications
Failing to address defective return notices under Section 139(9) or adjustment notices under Section 143(1)(a) within the given timeframes can make the ITR invalid, reduce refunds, or lead to additional tax demands. Taxpayers must respond to all Income Tax Department communications promptly and accurately. Additionally, unresolved outstanding tax demands from previous years may lead the department to offset the current refund against the old liability. Taxpayers sometimes mistake this statutory adjustment for a simple delay.