Quick Read
- India’s Central Board of Direct Taxes (CBDT) expects to release most remaining income tax refunds in February 2026.
- Approximately 95% of refunds held back since December 2025 have already been disbursed.
- Refunds were initially delayed due to concerns over wrongly claimed amounts, identified through spot verifications.
- Taxpayer errors, including mismatched personal details, math mistakes, and incorrect bank info, commonly cause refund delays globally.
- A CBDT “nudge” campaign led to ₹8,800 crore in additional tax payments or reduced refund claims over two years.
NEW DELHI (Azat TV) – The Central Board of Direct Taxes (CBDT) has confirmed that the vast majority of income tax refunds held back in December are expected to be released shortly, with a significant portion anticipated in February 2026. This announcement comes as tax authorities globally, including the IRS in the United States, continue to grapple with a high volume of filing errors that frequently delay payouts, emphasizing the critical need for taxpayer accuracy.
Pending Refunds Nearing Release
Ravi Agrawal, Chairman of the Central Board of Direct Taxes, stated in an exclusive interaction that approximately 95% of pending income tax refunds, measured by the number of cases, have already been disbursed. The remaining refunds, which were initially held back due to concerns over potentially incorrect claims, are now expected to be released imminently, most likely within February. This swift action follows spot verifications conducted between July and August 2025, which uncovered instances where certain intermediaries facilitated erroneous refund claims, prompting the temporary hold on a segment of payouts.
The CBDT’s proactive approach has also included a “nudge” campaign over the past two years, encouraging taxpayers to revise or update their returns. This initiative has been notably successful, leading to a reduction of approximately ₹1,750 crore (around $210 million USD) in refund claims. In total, 1.11 crore (11.1 million) returns were revised or updated during this period, resulting in additional tax payments or reduced refund claims amounting to ₹8,800 crore (around $1.06 billion USD), underscoring the department’s efforts to ensure compliance and accuracy in tax filings.
Common Pitfalls Leading to Refund Delays
While the Indian tax authority addresses specific instances of incorrect claims, the challenge of processing accurate refunds is a global one. In the United States, the Internal Revenue Service (IRS) reported flagging 33.5 million filing errors during the last tax season (referring to the 2024 tax season for 2023 returns), which led to delays for 3.6 million refunds, with some taxpayers waiting up to 14 weeks. These delays are often attributed to a range of common mistakes that trigger manual reviews or rejections of tax returns.
One of the most frequent issues is a mismatch between personal details and official records. Taxpayers’ names and Social Security numbers must align precisely with Social Security Administration (SSA) records. Simple typos in these crucial identifiers, or instances where divorced parents or extended family members incorrectly claim the same child as a dependent, are common causes for e-file rejections. The IRS’s e-file system automatically flags and rejects returns with incorrect or duplicate Social Security numbers, necessitating corrections and resubmissions.
The Impact of Mathematical Errors and Banking Details
Mathematical errors also represent a significant portion of filing mistakes. The IRS alone handled 9 million “error-resolution cases” last year due to miscalculations, incorrectly added columns, or mixed-up figures. While the agency can often correct simple math errors and adjust refunds accordingly, more complex discrepancies typically lead to notices being sent to taxpayers, requiring clarification or an amended return, which inevitably extends the refund timeline.
Incorrect banking information poses another substantial risk to timely refunds. With the IRS phasing out paper checks and making direct deposit the default option starting September 2025, accurate routing and account numbers are paramount. Errors in these details can result in a rejected deposit and a delayed paper check, or in more severe cases, the refund being deposited into an incorrect account, which can be challenging to recover. Taxpayers are advised to meticulously verify these numbers, ideally by copying them directly from their bank’s official sources.
Ensuring Comprehensive Income Reporting and Correct Filing Status
Underreporting income is a serious issue that frequently triggers IRS scrutiny. All income, including earnings from side gigs or freelance work, even if paid through platforms like Venmo or Zelle, must be declared. Discrepancies between reported income and information received by tax authorities from employers or financial institutions can lead to a CP2000 notice, informing the taxpayer of missed income and additional tax owed, often accompanied by interest and potential penalties.
Furthermore, selecting the appropriate filing status is crucial, as it impacts tax brackets, deductions, and credits. Changes in marital status, such as marriage, divorce, or widowhood, frequently lead to errors in this area. Taxpayers are encouraged to consult official guidelines or tax preparation software to ensure they select the correct filing status, preventing unnecessary scrutiny and potential delays.
The emphasis from tax authorities on accurate and complete tax filings highlights a broader effort to streamline the refund process while ensuring compliance. The anticipated release of pending refunds in India, coupled with ongoing warnings from agencies like the IRS about common errors, underscores the growing importance of precision in tax declarations. This shift not only aims to expedite legitimate refunds but also to curb fraudulent claims, ultimately fostering greater trust and efficiency within the tax system.