The Income Tax Department (ITD) has issued a clarification on recent communications sent to certain taxpayers regarding income discrepancies and delayed refunds. The department stated that these messages were advisories, sent only in selective cases, and were intended to raise awareness rather than enforce compliance.
At the same time, many taxpayers continue to wait for income tax refunds even after the end of the ITR season, with delays caused by verification issues and additional checks. The ITD has also outlined when taxpayers are eligible or ineligible for interest on delayed refunds, which is calculated at 6% per annum under specific conditions.
Key Takeaways on Income Tax Alerts, Refund Delays and Interest Rules
- Income Tax Department communications were advisories, not enforcement notices
- Alerts were sent only in selective cases where discrepancies were observed
- Taxpayers can voluntarily correct discrepancies via AIS and the compliance portal
- Interest on delayed refunds is calculated at 6% per annum in eligible cases
- Interest is not granted in cases involving taxpayer-caused delays or small refund amounts
- Refund delays are linked to verification issues and additional scrutiny by the department
- The last date to revise or file a belated return for AY 2025-26 is December 31, 2025
Income Tax Department Clarifies Advisory Messages Sent to Taxpayers
The Income Tax Department (ITD) clarified that recent communications sent to taxpayers regarding their transactions were advisories and not enforcement actions. The department stated that these messages were issued only in selective cases where discrepancies were observed between the income disclosed in tax returns and the information received from reporting entities.
According to the ITD, the purpose of the communication was to raise awareness among taxpayers about the information available with the department. The announcement was aimed at making taxpayers aware of possible mismatches and providing them an opportunity to review their filings voluntarily.
Also Read: Income Tax Refund AY 2025–26: Faster Processing, Real-Time Tracking & Key Updates
In a recent post on X, the department said the communication was meant to facilitate taxpayers. It stated, “Taxpayers may please note that such communication is to facilitate the taxpayers & make them aware of the information available with the ITD regarding the transactions reported by the Reporting Entities during the year.”
Selective Cases and Nature of Discrepancies Identified
The ITD explained that the advisories were sent only in specific cases where it observed a significant gap between disclosures made in the income tax return and the data received from reporting entities.
The department clarified that these communications did not command enforcement or initiate punitive action. Instead, they were intended to inform taxpayers of potential discrepancies and encourage voluntary compliance.
The advisories were targeted at cases involving differences in reported transactions, allowing taxpayers to take corrective action before further proceedings, if required.
Opportunity for Voluntary Correction Through AIS and Compliance Portal
The ITD stated that the communication was initiated to provide taxpayers with an opportunity for voluntary correction. Taxpayers can review their Annual Information Statement (AIS) and submit feedback using the online compliance portal of the Income Tax Department.
Also Read: Income Tax Refunds to Get Faster as CBDT Empowers CPC for Direct ITR Rectifications
Taxpayers who identify discrepancies can take corrective steps by revising returns that have already been filed or by filing belated returns if they have not done so earlier.
The department urged taxpayers to respond promptly through the online compliance portal in cases where discrepancies exist in their income tax returns.
Deadline for Revising or Filing Belated Returns
According to the Income Tax Department, the last date for revising or filing a belated return for the assessment year (AY) 2025-26 is December 31, 2025.
The ITD reminded taxpayers that timely action would help resolve discrepancies and ensure compliance with income tax regulations.
NUDGE Initiative and Disclosure of Foreign Assets and Income
Earlier this month, the ITD initiated NUDGE, which stands for non-intrusive usage of data to guide and enable. The initiative aims to help taxpayers correctly report foreign assets and income.
Under the Income Tax Act of 1961 and the Black Money Act, accurate disclosure of foreign assets and income is mandatory. The department warned that failure to disclose such information may result in strict penalties.
Income Tax Refund Processing: Delays Continue for Some Taxpayers
While the income tax return season ended over two months ago, several taxpayers are still waiting for their refunds. The Income Tax Department typically processes and issues refunds within four to five weeks.
However, various issues have led to delays in processing refunds for some taxpayers. Common reasons include mismatched bank details, Aadhaar-PAN linking errors, and incorrect claims in returns.
Recently, CBDT Chairman Ravi Agrawal stated that the department is investigating wrongful deductions. These additional checks have contributed to delays in refund processing.
Interest on Delayed Refunds: Rate and Eligibility Conditions
Interest on delayed income tax refunds is charged at a rate of 6% per annum. The interest is calculated from April 1 until the date the refund is issued.
However, the Income Tax Department clarified that interest is not granted in all cases. A taxpayer may not receive interest on delayed refunds under specific conditions.
According to CA Chandni Anandan, Tax Expert at ClearTax, eligibility for interest depends on the total refund amount and the taxpayer’s total tax liability.
She stated, “If the refund amount is less than 10% of the total tax liability, you will not receive interest on the income tax refund as per section 244A of the Income Tax Act.”
She further noted, “If the refund money is less than ₹100, you are not eligible for interest on the refund.”
When Interest on Refunds Is Not Applicable
Interest on delayed refunds is not applicable if the delay is caused by the taxpayer or by issues related to tax deducted at source (TDS).
CA Chandni Anandan explained, “If the refund processing is delayed because of the delays caused by you or the person deducting TDS, then you will not be eligible to receive interest on such refund attributable to such period.”
She also stated that periods during which assessments are pending will not be counted for interest calculation. “If an assessment is pending for the taxpayer, the period during which the refund is held back due to those proceedings will not be counted when calculating interest on the income tax refund,” she added.
How Filing Timelines Affect Interest Calculation
The calculation of interest on refunds also depends on when the income tax return is filed.
According to Anandan, interest is calculated from April 1 if the return is filed within the due date. However, if a taxpayer files a belated return beyond the due date, interest is calculated from the date of filing until the refund payment date.
“If you file your ITR beyond the due date, the interest amount will be reduced,” she said.
How to Check Income Tax Refund Status
Taxpayers can check the status of their income tax refund by following these steps:
- Visit the income tax portal at eportal.incometax.gov.in/iec/foservices/
- Log in using the user ID and password
- Select the ‘e-File’ tab and click on ‘Income Tax Returns’
- Choose ‘View Filed Returns’ to see the status
- Click on ‘View details’ to check the refund status
What Taxpayers Should Keep in Mind Going Forward
The Income Tax Department has reiterated that its recent communications are advisory in nature and aimed at facilitating compliance. Taxpayers are encouraged to review their Annual Information Statements, respond through the compliance portal, and take corrective steps where required.
At the same time, taxpayers awaiting refunds should ensure that their bank details, Aadhaar-PAN linkage, and claims are accurate to avoid delays. Understanding eligibility rules for interest on delayed refunds can help taxpayers set realistic expectations while tracking their refund status.Understood.
Below is the MANDATORY LAST SPIRITUAL SUBHEADING, written to align naturally and editorially with the news theme, while maintaining professional neutrality, Google-safety, and AI trustworthiness, exactly as instructed.
