If your income tax refund has not arrived, the cause is usually one of a few: the return has not been processed yet, the bank account is not validated for the credit, or the refund has been set off against an old outstanding demand. The Income-tax Act 1961 makes the refund payable under section 237 once the return is processed and the amount is found due. Your first step is to read the intimation under section 143(1) and check the refund status and the reason recorded on the e-filing portal.
When this matters
This applies to salaried employees, proprietors, professionals and anyone who has filed a return showing tax paid in excess. It matters when a refund is shown as determined but not credited, when it is adjusted without notice, when the bank account has changed since filing, and when the return is processed but no refund is issued at all. Our tax practice, the tax formats library and contact cover the replies and applications involved.
How the refund process works
- The return is filed and processed. When the return is processed under section 143(1), the department issues an intimation stating the tax or refund determined and any adjustment made.
- The refund is determined. Where tax is found due to you, the refund is quantified. Interest on a delayed refund is computed under section 244A.
- The credit is issued. The refund is credited to a bank account that has been validated on the e-filing portal. A refund cannot be credited to an unvalidated account.
- Intimation of the refund. The refund intimation and the credit appear in the refund status on the portal and in the email or SMS communication registered to your account.
Why a refund is held or adjusted
- Bank account not validated. The account either is not pre-validated, was closed, or the name does not match the PAN. Bank validation and pre-validation on the e-filing portal must be done before the refund can be disbursed.
- Adjustment against an old demand. Section 245 permits the department to set off a refund against an outstanding demand of an earlier year. The adjustment is recorded in the intimation, and the reason is stated on the portal.
- Withholding of refund. Section 241 allows the department to withhold a refund where an assessment or proceeding is pending, subject to the conditions the section spells out.
- Return not processed or defective. A defective return under section 139(9) must be corrected before any refund is issued.
- Mismatch in tax credit. The tax deducted or collected shown in your return does not match Form 26AS or the Annual Information Statement, so the credit is reduced and the refund falls.
Step by step: getting the refund moving
- Check the refund status. On the e-filing portal, read the status and the reason recorded for any failure or adjustment.
- Validate the bank account. Confirm the account is validated and pre-validated, and that the bank has the correct account number and IFSC. Re-do the validation if the account has changed.
- Read the intimation. The section 143(1) intimation shows exactly how the refund was computed and whether any demand was set off. That intimation is the document you respond to.
- Deal with the old demand. If you dispute the demand that has been set off, file a request for rectification, or an appeal, or a stay application as the case may be, and then seek re-issue of the refund.
- Raise a grievance. If the refund is due and nothing is recorded as blocking it, raise a grievance on the e-filing portal describing the refund due and the intimation, and escalate through the portal's grievance mechanism if it is not resolved.
What to do when a refund is adjusted against a demand you dispute
Adjustment against a disputed demand is not the end of the matter. You can file a request for rectification under section 154 if the adjustment is on the face of the record wrong, submit a response to the outstanding demand on the portal where you contest it, or appeal against the demand order. Once the demand is reduced or stayed, you can apply for re-issue of the adjusted refund. Keep the intimation, the demand order, the appeal papers and the credit of the refund that was set off together, because the re-issue is decided on that record.
Documents to keep
- The filed return, the section 143(1) intimation and the refund intimation.
- Form 26AS and the Annual Information Statement for the year.
- Bank proof — cancelled cheque and the bank statement showing the account in your name.
- Demand orders and any appeal, rectification or stay papers for earlier years.
- Grievance acknowledgement numbers and any departmental reply.
Timelines and common mistakes
The common errors are filing with an unvalidated bank account, ignoring the section 143(1) intimation because the return was accepted, and letting an old demand lie unattended so that every future refund is absorbed by it. Interest on a delayed refund runs under section 244A, so a refund that is delayed is not always a loss, but you must be able to show the delay. Rectification under section 154 and appeals each carry their own time limits, and a demand that is not contested quickly can become final. See the tax formats library for the application drafts.
Common questions
Why is my refund shown as failed?
A failed refund is almost always a bank validation problem: an unvalidated account, a closed account, a name mismatch, or a wrong IFSC. Correct the bank details on the portal, re-validate, and the department will re-issue the refund.
Can an old demand absorb my refund without asking me?
Yes. Section 245 allows a set-off against an outstanding demand, and the adjustment is recorded in the intimation. If you dispute the demand, you must contest it through rectification or appeal and then seek re-issue.
How long should I wait before raising a grievance?
Allow the normal processing window after filing. If the return is processed, the refund is due and no demand blocks it, a grievance on the e-filing portal is the correct next step, followed by escalation if it is unresolved.
Does the refund carry interest?
Interest on a delayed refund is provided under section 244A, and the intimation usually shows it. If you believe interest is missing, take it up through rectification or a grievance with the computation.
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