In a major relief for thousands of taxpayers, the Central Board of Direct Taxes (CBDT) has extended the deadline for processing electronically filed income tax returns (ITRs) that were incorrectly marked as invalid. This crucial move aims to fix long-standing issues caused by technical errors at the Centralised Processing Centre (CPC), Bengaluru, which led to delayed or rejected tax filings.
Why Were Returns Invalidated?
Previously, many ITRs filed correctly by taxpayers were erroneously flagged as invalid by the CPC due to backend glitches. The deadline for processing these returns, which was most recently December 31, 2024, for Assessment Year 2023–24, had expired. This left countless taxpayers in a difficult position, unsure about their compliance status and pending refunds.
What Has CBDT Done?
Acting under Section 119 of the Income-tax Act, 1961, the CBDT has now allowed these invalidated returns (specifically those filed electronically up to March 31, 2024) to be revalidated and processed. This directive was officially issued via Circular No. 10 of 2025 on July 28, 2025.
Intimations under Section 143(1) of the Income-tax Act, 1961, confirming the processing, will be issued by March 31, 2026.
How Will Taxpayers Benefit?
This decision brings significant advantages:
- Refunds Restored: Taxpayers whose returns were wrongly marked invalid will now receive their pending refunds, along with applicable interest under Section 244A of the Income-tax Act, 1961. This compensates them for the delays caused by CPC’s processing errors.
- Compliance Status Fixed: Previously rejected returns will now be recognized as valid in the tax system. This helps taxpayers avoid potential penalties or notices for non-filing.
- Relief for Unaware Taxpayers: Many individuals didn’t even know their returns had been rejected. This move gives them a crucial second chance to have their filings recognized without needing to refile or pursue legal action.
- Improved Financial Planning: For those who depend on tax refunds for their finances, this ensures greater predictability and stability, aiding in better financial management.
Important Note on Refunds
It’s vital to remember that, as per Circular No. 03/2023 dated March 28, 2023, refunds will not be issued if your PAN is not linked with your Aadhaar. Ensure this linkage is complete to receive your dues.
Expert View
Tax expert CA Suresh Surana welcomed the move, calling it “a significant relief” that “restores both monetary dues and compliance credibility for taxpayers impacted by backend errors at the CPC.”
What Should You Do?
If you believe your ITR might have been affected, it’s advised to:
- Check the status of your past returns on the e-filing portal.
- Ensure your Aadhaar is linked with your PAN.
- Follow up on any refunds that may now be due to you.
This proactive step by the CBDT underscores its commitment to fair and responsive tax administration, especially as India continues to embrace digital tax systems.