ITR Delay: Income Tax Refund on Hold? Why Taxpayers Are Getting Alerts For AY 2025–26

The Income Tax Department Alerts Taxpayers In Bulk For AY 2025-26

In case you have received a message via SMS or an email from the Income Tax Department recently, consider yourself not the only one. A large number of taxpayers have been informed that the department’s risk management system has flagged discrepancies in their tax refunds for AY 2025-26, resulting in refunds being put on hold. The communication may be disturbing, especially when the money due to you is being withheld, but it does not necessarily mean that there is a problem.

Most of the time, it indicates that ITR information such as TDS, income, or deductions is misaligned and still needs clarification. The notification is, in fact, a reminder to re-evaluate your return, correct any mistakes if there are any, and act before the cut-off dates arrive.

What Does An “ITR Refund On Hold” Alert Mean?

The moment you see an “ITR refund on hold” message, it might immediately trigger a series of alarms, but do not panic. The alert is not a signal for an audit or unethical practice. To put it simply, the software has found a discrepancy in your Tax Deducted at Source (TDS) figures or the information mentioned under Section 285, and it is inviting you to have a second look at it.

Ashok Mehta, the Managing Council Member of The Chamber of Tax Consultants, states that the alert serves as a tool for taxpayers to rectify any discrepancies before the refunds are issued. Look at it as a mild reminder and not as a red flag to re-check your return before the refund amount goes into your bank account.

Why Your Income Tax Refund May Be Put On Hold: Common Mismatches To Watch Out For

Several discrepancies can lead to your income tax refund being put on hold. The most common triggers include:

• Interest income not declared despite being reflected in the Annual Information Statement (AIS)
• Capital gains that are missing or incorrectly reported
• Dividend income not disclosed during ITR filing
• Large deductions claimed under Sections 80C, 80D, or 80G that do not match the Income Tax Department’s records
• Claiming HRA deduction without deducting TDS on rent
• Sudden spikes or inconsistencies in exemptions and deductions compared to previous years

What Happens If You Don’t Fix The Errors Before December 31?

• December 31 is the final deadline to file a belated or revised return and correct mistakes related to income, deductions, or disclosures.
• Ignoring the alert does not guarantee immediate action, but it increases the risk of further scrutiny.
• Your case may be selected for limited scrutiny, requiring you to submit additional documents or explanations.
• A demand notice may be issued if the Income Tax Department has evidence of misreporting.
• Claims may be disallowed or undisclosed income may be added to your tax liability, resulting in additional tax payable.

(With Inputs)

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