1.23 Lakh ITRs Filed in 5 Days! When Will the Income Tax Department Start Processing Refunds?

The income tax filing season for assessment year 2025–26 has officially begun, with more than 1.23 lakh income tax returns (ITRs) already filed in the first five days. Nearly 90% of these returns have been verified. As taxpayers begin to meet compliance, the focus now shifts to understanding when the Income Tax Department will start processing returns and issuing refunds.

Filing Activity Begins with New Utilities and Delayed Start

The Income Tax Department initiated the filing process by releasing Excel-based utilities (V1.0), a new JSON schema, and validation tools for FY 2024–25. These tools currently support ITR-1 (Sahaj) and ITR-4 (Sugam). Shortly after releasing the offline tools, the department enabled online filing of ITR-1 and ITR-4 with prefilled data through the e-filing portal.

This year’s ITR filing commenced later than usual due to the delayed release of the forms and corresponding utilities. The ITR forms became available in late April, and the filing utilities followed shortly thereafter.

Rapid ITR Filing and Verification Numbers Indicate Strong Response

Within just 5 days of the utility release, over 1.23 lakh ITRs were filed, and more than 1.12 lakh were verified. This high rate of filing and verification points to strong taxpayer participation, despite the late start. It also raises anticipation regarding the processing timeline and refund issuance for the assessment year 2025–26.

When Will Processing of ITRs Begin and Refunds? 

According to available reports, the Income Tax Department may start processing returns by mid-June 2025. Refunds are typically credited to bank accounts within 5 to 7 days after the intimation is issued, assuming there are no discrepancies or pending actions from the taxpayer’s end.

Role of Third-Party Data in ITR Processing

Before processing a return, the Centralised Processing Centre (CPC) cross-verifies the data filed in the return with third-party sources such as:

• Form 26AS
   
• Annual Information Statement (AIS)
   
• Taxpayer Information Summary (TIS)

These data sets are populated using information submitted by financial institutions, employers, and other prescribed entities under the Statement of Financial Transactions (SFT) and TDS returns. Since the deadline for filing TDS returns for the last quarter is May 31, the finalised data is expected to be reflected on the income tax portal by early June.

Read More: Income Tax Filing: ITR-1 and ITR-4 Now Available for Online Filing for AY 2025–26!

Verification Is a Prerequisite to Start Processing

The CPC begins processing a return only after successful verification. Verification can be completed via electronic verification using Aadhaar OTP, net banking, or through the physical submission of ITR-V at the CPC office in Bengaluru. Without verification, the return remains pending and is not taken up for processing.

ITR Refund Average Processing Time Has Reduced Significantly

As per a statement made by Finance Minister Nirmala Sitharaman in Parliament, the average time taken to process ITRs has dropped sharply.

While it took an average of 93 days to process a return in 2013, the current average is around 10 days.

This reduction has been made possible by technological upgrades and better system integration at the CPC level.

Conclusion

While the filing process has had a delayed start this year, the Income Tax Department appears prepared to accelerate return processing. Taxpayers who have completed verification can likely expect refunds to begin flowing in by mid to late June, subject to successful data cross-verification.

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