Lakhs Await Income Tax Refunds for Assessment Year 2025-26; Unvalidated Bank Accounts, Old Dues Stall Payment

Income tax refunds are paid only after a return is processed and the money reaches a bank account pre-validated on the e-filing portal. In March 2026, reports on the assessment year 2025-26 described lakhs of taxpayers still waiting for refunds on returns already filed.

This explainer sets out the order in which a refund moves, the checks that can stop it, the figures reported for the 2026 backlog, and the steps to take when a refund fails or a return shows a tax credit mismatch.

From Filing to Payment: The Refund Sequence

A refund moves through three stages. The taxpayer files the return, the Income Tax Department verifies it, and then the return is processed and the refund is sent to the bank account. A delay can occur at any of them.

Outlook Money reports that refunds are usually issued within four to five weeks of filing, though some cases have seen a significant delay.

AngelOne gives a range by type of return. It says clean, error-free returns may be processed within a few weeks, returns with discrepancies can take two to four months, and complex cases may take even longer.

Verification is the first stage to check. AngelOne lists returns that have not been e-verified among the causes of delay and says such returns are not processed at all. Verification is a separate step from filing, so a submitted return can wait for it before it reaches processing.

Why the Bank Account Has to Be Pre-Validated

Taxmann's guide to refund failures says a refund can fail if the bank account number is incorrect. The taxpayer adds the account under Profile, then My Bank Account, then Add Bank Account. The request goes to the bank or to the National Payments Corporation of India, and once validation succeeds, the account can be nominated for refunds.

Outlook Money says refunds can go only to a bank account pre-validated on the e-filing portal. It names incorrect IFSC codes, closed bank accounts and a mismatch in details filled by the taxpayer as causes of delay.

AngelOne adds accounts that are not validated or are inactive to the list. It advises taxpayers to pre-validate the bank accounts linked with their PAN.

The account has to pass validation before any refund can be sent to it.

Taxmann says non-residents without an Indian bank account can give a foreign bank's SWIFT code, bank name and IBAN to receive refunds.

Checks, Mismatches and Old Dues That Hold a Refund

Outlook Money says returns claiming unusually high refunds are flagged for enhanced verification, as are returns where the ITR and Form 26AS do not match and returns with inconsistent deduction claims. It adds that high-value refund claims get deeper checks and that the department has stepped up matching against the Annual Information Statement (AIS) and Form 26AS.

AngelOne names the same ITR, AIS and Form 26AS mismatches. It also lists complex returns, such as those with capital gains or several income sources, and says minor discrepancies in income reporting, TDS credits or capital gains can trigger additional scrutiny.

AngelOne also includes a surge of filings near deadlines among the causes of delay.

Old dues are a separate hold. Outlook Money reports that pending dues from earlier years can be set against the current refund, and that a scrutiny or assessment for an earlier year can hold up the current one. Taxmann's guide says the same about outstanding demands and recommends answering them under Pending Actions, then Response to Outstanding Demand.

Outlook Money says these held cases remain within the legal process and that the delays do not indicate errors or lapses.

The 2026 Backlog in Numbers

AngelOne reports figures for FY 2025-26 as of 24 March 2026. It gives 8.89 crore returns filed (8,89,20,822), 8.78 crore verified (8,77,86,233) and 8.51 crore processed (8,50,59,270). It says over 27 lakh returns are pending processing and attributes processing to the Central Processing Centre (CPC).

Subtracting the processed total from the verified total gives 27,26,963 returns. That calculation is consistent with the 'over 27 lakh' figure in AngelOne's report.

Outlook Money gives different totals for AY 2025-26: 8.82 crore returns filed and 8.69 crore verified. Its filing total is about seven lakh lower than AngelOne's. Outlook Money also says lakhs of taxpayers were still waiting, without giving a count.

The figures count returns, not rupees, so they do not show how much refund money is waiting to be paid.

The account has to pass validation before any refund can be sent to it.

Checking Where a Refund Stands

Outlook Money says the status under View Filed Returns on the e-filing portal may read 'Processed with Refund Due', meaning the CPC has approved the refund but it has not been paid. It may also read 'Refund Failed', meaning a transfer was attempted and did not go through, or 'Refund Paid'.

A status of 'Processed with Refund Due' indicates the refund is approved but still unpaid.

AngelOne recommends regularly tracking refund status online and cross-checking the AIS, TIS and Form 26AS before filing.

Reissuing a Failed Refund and Fixing Credit Mismatches

Taxmann's guide lists the reissue route for a refund that failed because of a wrong bank account. The taxpayer logs in to incometax.gov.in, goes to Services, selects Refund Re-issue, chooses Create Refund Re-issue Request, picks the return record, selects the correct bank account and clicks Proceed to Verification.

The corrected account has to be validated first, since an account can be nominated for a refund only after validation succeeds.

Taxmann also covers tax credit mismatches, which can come from an invalid or duplicate deductor TAN, TDS entered in the wrong schedule, wrong challan details, or another deductor's TDS being included. If the deductor's TDS return is the source, the guide says the taxpayer should ask the deductor to correct it. For a taxpayer-side error, the taxpayer goes to Services, then Rectification, clicks New Request, selects the Assessment Year, chooses the Tax Credit Mismatch Correction option, reviews the schedules, enters the correct details and submits for verification. If the Assessing Officer processes the return, the request goes to that officer.

Where TDS was deducted but not deposited by the deductor, Taxmann suggests filing the return and claiming the credit. If a mismatch notice follows, the taxpayer can reply with supporting documents such as salary slips and bank statements, and the guide notes that CBDT instructions limit coercive recovery from the taxpayer in such cases.