Income tax refund stuck due to risk management: How long can refunds be delayed? Top 5 questions answered

Over the past few days, the Income Tax Department has sent bulk emails and SMS notifications to taxpayers, notifying them that their income tax refunds have been placed on hold due to discrepancies detected in their ITR filing.

Several affected taxpayers have flagged the issue online, taking to social media to report that they were not notified earlier and seeking clarification from the tax authorities. Since these alerts have come just days before the deadline to make corrections to ITR filings, many have expressed concern and called for an extension.

“Processing of the said return was held as it was identified under the risk management process on account of certain discrepancies in the claim of refund. An email with details has also been sent to your registered email address,” the message sent to taxpayers typically reads, according to multiple screenshots shared on X by users.

The due date to make all the corrections and submit a revised ITR for AY2025-26 is 31 December 2025.

How long can a refund be delayed due to risk management checks?

Taxpayers whose refunds have been flagged under risk management may have to wait anywhere from a few weeks to a couple of months to receive them, said Suraj Singh, the Founder of SD Singh and Associates, adding that an exact timeline cannot be specified.

However, he also specified that the delay should ideally not stretch beyond that period, as the returns have already passed through the department’s AI-enabled verification systems, which subsequently triggered these alerts.

If discrepancies are found in the department records, a formal demand or clarification notice may follow within a similar timeframe. “In such cases, refunds are released only after document-based verification (scrutiny) is completed,” Singh said.

However, it is essential to note that no fixed timeline can be guaranteed, as processing times vary from case to case.

Did taxpayers from both new tax regime and old tax regime receive this message?

According to tax experts, the alerts were not limited to taxpayers under a single tax regime; beneficiaries of both new and old tax regimes received them.

However, they also noted that a majority of cases appear to have been sent to taxpayers who opted for the old tax regime, largely because it offers deduction-based tax planning avenues. While cases under the new regime arise only due to under-reporting or non-disclosure of income, rather than deduction claims.

“Errors and, in many cases, inflated or fabricated claims are easier for the system to flag, especially now that data from multiple reporting sources is integrated and cross-matched automatically,” Singh said.

Should taxpayers be scared if they receive such a message? Can they face scrutiny?

If your refund has been put on hold under risk management, it means the system has identified a mismatch with the income tax return and TDS details or information reported under section 285. The provision seeks to give the assessee an opportunity to rectify any errors, said Ashok Mehta, Managing Council Member of The Chamber of Tax Consultants.

Hence, if there is no reason to panic for genuine taxpayers. All they have to do is simply review their filings, ensure income and deduction data match Form 26AS/AIS/TIS, and correct any unintentional errors if found.

Concern is warranted for only those taxpayers who have deliberately avoided or underreported tax liability to get refunds, Singh said. He added that such intimations are aimed at improving compliance without immediate penal action.

What are some common reasons that led to your tax refund being stuck?

Here are some of the common reasons that may have contributed to your refund getting stuck:

• Mismatch between income reported and Form 26AS / AIS / TIS
• Non-reporting of capital gains, F&O trades, ESOPs, foreign income/assets
• Inflated or questionable deductions (HRA, insurance, donations, etc.)
• Not responding to compliance portal queries/intimations
• Sale of property not reported under capital gains
• High credit card spending/assets purchased/forex expenditure without corresponding income disclosure

What happens if you don't make the corrections by 31 December?

The last date to file a revised return this year is just five days away. If you miss the 31 December deadline, then the only option left is to file an ITR-U, which involves additional tax, interest, and penalty implications, Singh said.

“It is also important to note that refund claims cannot be removed or newly claimed in ITR-U, meaning even if corrections are made later, taxpayers may permanently lose the refund they are legitimately entitled to,” he added.

If a taxpayer chooses not to take any action, the return may still be processed. Following this, the tax department may issue a notice under Section 133(6), seeking information for verification. If the response is found to be unsatisfactory, then scrutiny may be initiated under Section 147, said Mehta.