Income Tax Refund: When is refund issued, partially adjusted and what are reasons for its failure? All you need to know

Several taxpayers who filed their income tax returns (ITR) in September for the Assessment Year 2025-26 are still waiting for their refunds to be credited.

An income tax refund refers to the amount returned by the income tax department if the tax paid by an individual exceeds their actual tax liability. this excess payment may arise due to Tax Deducted at Source (TDS). Tax Collected at Source (TCS), advance tax, or self-assessment tax.

The final tax liability is determined by the department after factoring in all the applicable deductions and exemptions at the time of assessment, following which the excess amount paid is issued as a refund by income tax department.

When is the refund processed?

The processing of refund by the tax department begins only after the return is e-verified by the taxpayer. Usually, it takes 4-5 weeks for the refund to be credited to the account of the taxpayer, according to an official release by the Income Tax Department.

However, if refund is not received during this duration, the taxpayer must check for intimation regarding discrepancies in ITR.

They must also check their email for any notification from the IT department regarding the refund. The taxpayer must also check refund status on the e-filing.

What documents do you need?

Here are the pre-requisites for availing this service:

— Valid User ID and Password.

— PAN must be linked with Aadhaar number.

— ITR filed claiming refund

When the refund is issued

This is how your refund status should look like when its fully processed:

When the refund is partially adjusted

This is how your refund status should look like when its partially adjusted:

When full refund is adjusted

When refund is failed

Reasons for failure in processing the refund

In addition to delays in processing, a refund from the Income Tax Department scheduled to be paid may fail to get credited to your bank account due to the following reasons:

1. In case the bank account is not pre-validated. It is now compulsory to pre-validate your bank account.

2. The name mentioned in the bank account does not match with PAN card details.

3. In case of an invalid IFSC code.

4. If the account that you have mentioned in the ITR has been closed.

When is the deadline for filing belated return?

While the last date to file an income tax return ended on 16 September, a taxpayer can still file their belated income tax return (ITR) before 31 December 2025.

The provision to file a belated return is important for taxpayers since it would prevent them from incurring any penalty or fine for not clearing their tax liability. But since you would be filing income tax return way past the deadline, you would be liable to pay a late filing fee and interest, Mint reported earlier.