Income Tax Refund Delayed: Tax professionals explained the situation regarding refunds in that they have not been denied but rather “put on hold,” and that they will be processed as soon as the mismatch is sorted out.
Salary earners facing refund delays
More and more salary earners who are due refunds for the financial year 2025-26 are witnessing excessive delays in the processing of their income tax returns.
Income Tax Department flags mismatches
The Income Tax Department has directed that in cases where tax return forms claimed exemptions that were different from salary amounts provided by employers in Form 16, refund processing is typically delayed. The problem has been revealed via emails sent to taxpayers, alerting them that the unusually large refund claims have resulted in the initiation of internal risk assessments.
Significant mismatch between ITR and Form 16
The mentioned communication has identified a “significant mismatch” between the exemptions claimed in the ITR and the Numbers that have been acquired in Form 16 (Annexure II). The department remarked that such inconsistencies have caused the refund amounts to be overstated, thus leading to the returns being flagged and refunds not being processed until the situation is clarified or until a mismatch is resolved.
Refunds paused, not rejected
Tax experts clarified that refunds have been put on hold, not denied, and will move forward once the mismatch is resolved or explained satisfactorily.
What taxpayers should verify
Taxpayers have been advised to verify that the exemptions claimed, such as house rent allowance, leave travel allowance, or other deductions, are completely supported by documents and reflected in the Form 16 issued by the employer. Claims that were made while filing the return but are not supported by Form 16 appear to be one of the major reasons for scrutiny.
Warning on non-compliance
The email also includes a warning that non-responsiveness may be interpreted as a case of intended non-compliance, which will raise the chances of the case being selected for a more thorough examination later.
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