ITR Filing FY 2024-25: Why Your Tax Refund Might Be Delayed or Reduced

The Income Tax Return (ITR) filing for the financial year 2024-25 is expected to start soon, once the Income Tax Department releases the relevant forms and utilities on its e-filing portal. Many salaried individuals are eagerly awaiting this to claim timely refunds.

Why Your Refund Might Be Withheld or Reduced

This year, taxpayers might notice smaller refunds or even receive none at all. The primary reason? Pending assessments from previous years. The tax department has sent emails to many, alerting them about old dues being adjusted against current refunds under Section 245(2) of the Income Tax Act, 1961.

Section 245(2) empowers the department to withhold or adjust refunds if there are outstanding tax liabilities from earlier years. Refunds in such cases are subject to clearance from the Jurisdictional Assessing Officer (JAO), which can cause delays.

Purpose Behind the Notices

The Income Tax department intends to recover past dues and prevent revenue leakage. Taxpayers whose returns are under assessment or reassessment may find their refunds withheld until verification concludes. According to tax experts, this signals a sharper focus by the department on closing past tax gaps before issuing current refunds.

How to Respond to a Notice

If a taxpayer receives a Section 245(2) notice, they should promptly log in to the e-filing portal and check the “Response to Outstanding Demand” section. In case of discrepancies—like already paid demands or errors—submit an online response with supporting documents.

If taxpayers are unable to resolve their query online, they can file a rectification request under Section 154 or contact their jurisdictional officer.

Conclusion

As the ITR season approaches, taxpayers must stay alert, review past filings, and respond swiftly to notices to avoid refund delays.

Read more on: How the Income Tax Department Is Using AI to Track High-Value Transactions

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.