Common Tax Mistakes That Can Delay Your Tax Refund in 2024

It can take as few as 7 days to get your income tax refunds, the one thing to look forward to in the tax season. However, accidental errors can delay your refunds, potentially for months. You'll also have to go through the process of requesting a refund re-issue.

The reason for tax refund delays could be anything from incorrect personal information to inaccuracies in reporting income and deductions. Let us go over the most common mistakes in filing Income Tax Return (ITR) so that you can avoid any potential problems down the road.

Most Common Reasons Leading to Delay of your Income Tax Refunds

Delay in Verification of your ITR

This is one of the most common tax filing mistakes. When concerns over tax refund delays were raised for AY 2023-24, it was revealed that 1.4 million ITRs had not been verified till the first week of September 2023.

If you have not e-verified your return within 30 days of filing, it will be considered invalid by the income tax department.

Delay in Filing

When you file your tax return late, the income tax department may give priority to the returns that were filed on time. The resulting backlog of late filers can result in longer processing time on issuing refunds.

Additionally, if you have missed the deadline and have to pay a penalty, the refund process will get further complicated.

It is recommended to file income tax returns online as early as April to get timely returns.

Filing in Extended Deadlines

One of the reasons for extended deadlines is the e-filing portal facing heavy traffic in the last days of filing taxes. The huge amount of filing being processed at the same time will most likely delay your refund.

Technical issues or errors are also more likely at this time, and filing after the due date may result in added scrutiny of the returns. Both these factors further complicate the refund process.

It is better to file your tax return within the original deadline to avoid these issues.

Filing an Incomplete Return

In this case, the income tax department may need to request additional documentation or clarification from you, increasing the processing time. An incomplete return may also lead to a manual review process, naturally resulting in a delayed refund.

Make sure that you double-check for any missing information and include all the necessary supporting documents before you file an income tax return online.

Revising Your Return

Your refund can only be processed after the revision of your return. Moreover, this action may trigger a review process for evaluating your updated information against the original. The delay will depend upon the complexity of your revision.

It is best to avoid a situation where you have to revise your return. If there is no way around it, ensure that the revision is supported by the necessary documents.

Error in Return in Computation or Details

Errors in tax computation such as incorrect income or deductions can require tax authorities to thoroughly review your return for corrections. They may also require you to submit additional documents or answer the income tax notices to provide clarifications. The time taken for rectification of mistakes in income tax filing will only prolong the refund process.

TDS Mismatch

TDS mismatch is also one of the most common tax filing mistakes. The mismatch occurs when the TDS amount reported in your return does not match the income tax department records. It might be a typing error on your part or the deductor (such as employer or bank) has entered incorrect information. The refund delays result from the department having to resolve the mismatch by directly contacting you or the deductor.

Wrong Bank Details

Your tax refund is deposited into the account you have specified in your return. Wrong account information, such as the account number, IFSC code, or the holder's name, will cause the transaction to fail. The refund amount will likely bounce back to the income tax department, and you will have to take the extra steps to claim your refund.

Wrong Address

The income tax department may send an important notice that needs to be answered or the refund cheque to your postal address. If the address you have provided is incorrect or not updated, your refund will not get processed until the correct information is provided.

Not Verifying Online

You may have opted for the traditional method of verifying your return by post instead of doing it online. While it will not make much difference to the accuracy of the return, it will increase the time it takes to verify. Go for the online verification option to get your refunds faster.

Wrong Selection of ITR Form

An incorrect ITR form will open up a long process of having to re-file your returns or recalculate taxes. To avoid delays due to a wrong ITR form, refer to the income tax department guidelines on selecting the appropriate one.

No/Delayed Response to Notice

There are times when the income tax department may send you a notice. It could be to either seek clarification for any inaccuracy or request additional documentation. If you don't respond in a timely manner, your refund may be put on hold until a clarification is provided. Failure to respond may also result in added scrutiny on your return.

Therefore, it is important that you do not ignore any income tax department notices and respond promptly.

Making False Claims

When you file your tax return, it is crucial not to knowingly provide inaccurate information, such as disclosing a lower income. It will not only set back your refund but can also result in legal action or a penalty. Make sure that you only provide truthful information to the best of your knowledge.

Delay in Submitting Additional Documents Required by the IT Department

The longer you take to provide any additional documents requested by the department, the longer it will take to process your refunds.

Incorrect Tax Deposited Details

You have to disclose the tax deposited amount when you file your tax return. If you make an error here, there will be a discrepancy between the disclosed amount and the actual amount deposited. The income tax department will need more time to check the issue and verify the correct amount deposited. Be sure to verify the amount to avoid refund delays due to this.

Refund Adjusted Against the Previous Year's Demand

Sometimes, the refund for the current year may be affected by outstanding tax dues or penalties from the previous assessment years. Your current refund will be adjusted against the outstanding due, which will require more refund processing time. Ensuring previous years' taxes are paid in full will help you get your refunds on time.

Must Read:How To File Taxes Under The New Regime In India

How Long does it take to Receive a Tax Refund?

The average time for the refund to be deposited into your account is 4 to 5 weeks. In some cases, the refund has been processed within 7 to 8 days of filing the tax return. Generally, the time taken to receive your refund will depend on the income tax department's internal process.

How Long can a Tax Refund be Delayed?

Delays due to common tax filing mistakes like incorrect TDS details or delays in e-verification can range from a few weeks to a few months. In case of serious issues like making false claims or tax evasion, the delay can extend beyond a few months.

How Do I Find out Why My Tax Refund is Taking so Long?

Here are some ways you can find out the reason for delay beyond the average period of 4 to 5 weeks -

• Track your ITR status: You can do this on the income tax department e-filing portal. This will give you an indication of any potential issues. 
• Look for income tax notices: You may have received a notice from the tax department requesting clarification or additional documents. 
• Call the Centralized Processing Center (CPC): The CPC can be reached through their helpline numbers if the online portal does not provide answers. Keep information like your PAN, assessment year, and acknowledgment number ready before calling.

Must Read:Penalty For Late Filing of ITR: Everything You Need to Know

Conclusion

While it is possible to get tax refunds in a relatively short amount of time, even seemingly minor errors can delay your tax refunds by potentially months. It is crucial to file your return within time to avoid errors due to the last-minute rush, and proactively check for any notices from the income tax authorities.

If you face a tax refund delay despite your best efforts and need urgent funds, consider applying for a personal loan. At SMFG India Credit, the loan application is quick with an online process. Once approved, the funds can be disbursed to your account within 30 minutes*, so that you can quickly take care of your financial obligations. Depending on your credit score and how well you meet other eligibility criteria, you can get an interest rate as low as 13%* per annum.