12 lakh ITR filers for FY2023-24 have not got tax refund despite income tax dept releasing it: Check how to fix issue

Out of 3.68 crore Income Tax Returns where tax refunds were issued for FY2023-24, tax refunds have not been credited to the taxpayer’s account in case of about 12 lakh ITRs due to various reasons. This was stated in the Rajya Sabha by the minister of state in the finance ministry. The due date to file Income Tax Return (ITR) for individuals not liable for income tax audit for FY 2023-24 (AY 2024-25) was July 31, 2024. Pankaj Chaudhary, minister of state in the Ministry of Finance, said in written reply to a question asked in the Rajya Sabha: “The number of Income Tax Returns (ITRs) relating to Assessment Year 2024-25, where refund is claimed is 3.98 crore (as on 21.01.2025). Out of this, 3.94 crore ITRs are verified by the taxpayers and hence, are treated as valid. Out of such 3.94 crore ITRs, 3.68 crore refund returns are accounted with refunds issued. In 3.56 crore ITRs, refund has been paid to the taxpayers. In approximately 12 lakh ITRs, the refund issued has failed to be credited to the taxpayer’s account.”

Why 12 lakh ITR tax refunds were not credited to taxpayers’ bank accounts

Minister Chaudhary said: “In approximately 12 lakh ITRs, the refunds issued have failed to be credited to the taxpayer’s account due to the following main reasons:

1. The bank account provided in the ITR is not valid.
2. Refund was sent to the destination bank, but returned
3. Proceedings for adjustment of refund to outstanding demand u/s 245(1) of the Income tax Act, 1961 are pending.
4. PAN is not linked to Aadhaar.
5. Proceedings for adjustment of refund u/s 245(2) of the Income-tax Act, 1961 are pending.

In addition, the main reasons for pendency of refunds are as under:

1. Reply awaited from taxpayers in respect of notices issued for defective return and other communications.
2. Other cases, involving variance, are at post verification stage.”

Chartered Accountant Ashish Karundia, says, “In the statement made in Rajya Sabha, it was highlighted that one of the major reasons for the delay in processing tax refunds is the lack of taxpayer responses to notices regarding defective returns. To enable the release of the income-tax refund, taxpayers are advised to respond to the notice of defective return, regardless of whether they agree with the identified issues or not. Only after this response can the Income Tax Department process the return and determine the refund amount. It’s important to understand that submitting a response does not automatically result in a refund, but it allows the tax authorities to continue processing the return, which has been delayed due to unresolved defects.”Also read: Income tax on cash spending: These expenses will be considered as income and accordingly taxed if incurred in cash

How to check the ITR portal for any defective ITR income tax notice?

As seen from above, the Minister said one of the main reasons why 12 lakh ITR filers have not received tax refunds is that taxpayers failed to reply to notices issued for defective ITR and other reasons.

Here’s a step-by-step guide on how to check if you have been issued a notice for filing defective ITR on the ITR e-filing portal:

Step 1: Go to the e-filing ITR portal and login using your credentials. Then click on the ‘e-Proceedings’ tab under the ‘Pending Actions’ column.

Source: e-filing ITR portal

Step 2: If there is a ‘defective ITR’ notice under section 139(9) issued to you for the ITR you have filed then it will show under ‘For your Action’ tab. Click on the ‘View Notices/Orders’ button.

Source: Income Tax Department Official YouTube channel

Step 3: A new web page will open and here you need to click on the ‘Submit Response’ button to give your reply to this ‘defective ITR’ notice. Once you click this button a new webpage will open.

Source: Income Tax Department Official YouTube channel

Step 4: If you disagree with the defective ITR notice then click on the ‘Disagree’ button and write the reason for disagreement. If you agree, then click on the ‘Agree’ button and select the mode of response as ‘Offline Utility’ and then select your ITR type as the form you used for ITR filing i.e. ITR-1, 2 or 3 for individuals. Fill in the ITR form again with correct details and upload/file it again. Once you have filed your response (corrected ITR), you need to accept a declaration and then proceed. After filing corrected ITR you need to e-verify it also. However, above procedure can’t be used for changing gross total income or deduction/exemptions in the ITR.

Also read: More taxpayers getting defective ITR notice from tax dept this year; How to rectify the defect.

If you wish to change the original gross total income or deductions claimed under Chapter VI-A of the Income Tax Act, 1961 then you need to file a revised ITR.

Source: Income Tax Department Official YouTube channel