Income Tax Refund Delay: Why Over 50 Lakh Taxpayers Are Still Waiting In 2026?

Over 50 lakh taxpayers are still waiting for their income tax refunds in 2026 due to factors such as processing backlogs and verification issues at the Income Tax Department. This blog explains why this income tax refund delay is happening, factors affecting your income tax refund, and the steps you can take to check your refund status.

Why is the Income Tax Refund Delay Happening?

Income tax refund delays are frustrating, but they rarely happen without reason. Let’s break down the key factors keeping your refund on hold.

High Processing Volumes and System Backlog

The Centralised Processing Centre (CPC) faced an unprecedented surge in ITR filings for FY 2024-25, partly due to extended filing deadlines. This influx stretched processing timelines beyond the usual 4-5 week window, pushing many refunds into a queue. The Income Tax Department has until December 31, 2026 to process all returns filed for this financial year.

Data Mismatches in ITR Filings

One of the most common reasons for refund delays is a mismatch between the income reported in your ITR and the figures reflected in Form 26AS, the Annual Information Statement (AIS), or the Taxpayer Information Summary (TIS). This usually happens when TDS deducted by your employer, bank, or other deductors is not correctly reported or updated at the time of filing.

Even small differences in interest income, salary components, or capital gains can trigger a verification hold. Until these discrepancies are reconciled or clarified, the refund remains on hold.

Compliance Flags and NUDGE Campaign Scrutiny

The automated CBDT NUDGE campaign, launched in December 2025, has intensified scrutiny of tax returns to identify potential non-compliance or under-reporting. If your return is flagged under this system, the refund is withheld until you respond to notices or submit clarifications through the portal. Delays often occur when taxpayers overlook these communications or respond after the prescribed timelines.

Unverified Returns and Bank Account Issues

If you filed your ITR but skipped the verification step via Aadhaar OTP, net banking, EVC, or ITR-V form, your return is considered invalid, and refunds won’t be released. Similarly, incorrect or inactive bank account details prevent the refund from being credited, even if everything else is in order. Outstanding tax demands can also trigger refund adjustments or withholding under Section 245(2) of the Income Tax Act.

Also Read: 9 Useful Income Tax Saving Tips For Small Businesses

What You Should Do If Your Refund Is Delayed

If you find that your income tax refund is delayed, taking proactive steps can help resolve the situation sooner. Take these steps to unblock your refund:

• Verify your ITR status on the e-filing portal (www.incometax.gov.in) under “View Filed Returns” or “Refund Status” to check if it's been verified and processed.
• Cross-check your data against Form 26AS, AIS, and TIS to identify income or TDS mismatches. If you spot discrepancies, note them down before reaching out to the department.
• Ensure your bank account is active and correctly entered in your ITR. Log into your e-filing account and verify the account number, IFSC code, and bank name match your actual bank records.
• Confirm your PAN-Aadhaar linkage is complete and error-free. Mismatches here can delay refund disbursement significantly.
• Check for pending IT Department notices or intimations under Section 143(1). If you've received one, respond promptly with clarifications or file a revised/updated return before the stipulated deadline.
• Contact the CPC or your jurisdictional assessing officer if your refund status shows “On Hold” or “Under Processing” for over 90 days without further updates. Request specific reasons for the delay in writing.
• Keep all documentation handy: ITR acknowledgement, bank statements, salary slips, investment proofs, and any department correspondence. This speeds up resolutions.

How to Check Your Income Tax Refund Status

You can check your income tax refund status online through the Income Tax Department portal to see whether your refund has been issued. Here’s how:

• Visit the official IT portal at www.incometax.gov.in and log in with your PAN and password.
• Navigate to “My Account” and select “Refund Status” to see real-time updates on whether your refund has been issued, is under processing, or is on hold.
• Use your ITR acknowledgement number from your filing receipt to search for detailed processing stages.
• Check the status description carefully: “refund Issued” means funds have been dispatched (contact your bank if not credited within 5 business days); “Under Processing” indicates routine review; “On Hold” signals a compliance issue requiring your response.
• Compare refund status with Form 26AS to confirm all TDS credits are reflected. Discrepancies here often explain delays.
• If the portal shows no recent updates for over 60 days, escalate by filing a formal grievance with the CBDT or contacting the IT Department's Help Centre for assistance.

Also Read: How Many Taxpayers Are There in India? Types, Categories & Latest Data

To Conclude

Income tax refund delays in 2026 are largely due to processing backlogs, data mismatches, compliance checks, and verification issues. Most delays can be resolved by reviewing your ITR status, fixing discrepancies in Form 26AS or AIS, and responding promptly to notices. Regularly tracking your refund status and taking timely action can help ensure your refund is credited without further delay. In case an income tax refund delay is affecting your cash flow or you’re in urgent need of funds, Poonawalla Fincorp’s Instant Personal Loan up to ₹5 Lakhs provides an affordable solution to bridge the gap. Apply now with minimal documents and avail funds without delay.

FAQs

How long does it usually take to get an income tax refund in 2026?

Refunds are generally processed within 4 to 8 weeks after ITR verification. However, due to high filing volumes, timelines may extend to several months in some cases.

Can the IT Department adjust my refund against old tax dues?

Yes. Under Section 245 of the Income Tax Act, refunds can be adjusted against outstanding tax demands after due intimation.

What does “Refund On Hold” mean on the income tax portal?

It means your refund is temporarily withheld due to a compliance issue, mismatch, or pending response to a notice from the IT Department.