ITR Filing 2025: Your Income Tax Refunds May Be Delayed, Know the Reasons

Income tax refund delays in 2025 are troubling many taxpayers who are waiting for their dues. The main issues are linked to the delayed availability of ITR-2 and ITR-3 forms, ongoing backend upgrades on the Income Tax portal, and changes introduced under the Finance Act, 2024. 

As the refund timeline stretches, individuals with multiple income sources or business income remain most affected.

Delayed Release of ITR-2 and ITR-3 Utilities

As of July 4, 2025, the Income Tax Department has yet to make ITR-2 and ITR-3 utilities live on the e-filing portal. These forms are essential for taxpayers with capital gains, business or professional income, or income from multiple sources. Since these categories require more complex disclosures, their unavailability significantly delays the filing and refund process.

Technical Upgrades Slowing Down the System

One of the major reasons for the delay is the structural revamp of the forms after the Finance Act, 2024. Additionally, the department is upgrading its backend systems. These changes aim to enhance data accuracy and reduce fraudulent claims, but they have also caused the e-filing portal to function with limited visibility. At present, taxpayers cannot track the status of processing or refunds on the site.

Filing Season Started Late This Year

Unlike previous years, the filing season began in late May. This was almost a month behind schedule. Though over 75 lakh returns have already been filed and around 71.1 lakh have been e-verified, processing updates are missing. The absence of real-time information only adds to taxpayer anxiety, especially for those who usually receive timely refunds.

Backend Checks and Scrutiny Causing Further Delays

The Income Tax Department is reportedly conducting a thorough scrutiny of past records before releasing any refunds. This additional layer of verification, meant to detect fraudulent refund claims, has led to a longer turnaround time even for accurate and timely filings.

Refund Interest Remains Unfavourable

While taxpayers might expect compensation for the delay, the interest offered is minimal. Only those who have paid more than 110% of their actual tax liability will be eligible for interest, which is just 0.5% per month. Those who paid between 100% and 110% receive no interest. Moreover, any interest received is treated as taxable income under the head ‘income from other sources’.

Read More: ITR Filing for AY 2025–26: Which ITR Form from 1 to 5 Should You Use?

Conclusion 

Taxpayers should remain alert for updates on the release of ITR-2 and ITR-3 utilities. Once available, they should file their returns without delay and ensure prompt e-verification. Although no formal notification has been issued regarding refund delays, the current scenario indicates a longer wait for many. Those using ITR-2 or ITR-3 must prepare for slower processing this year.

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