In 2025, the Income Tax Department introduced new rules that require a detailed review of certain Income Tax Returns (ITRs), potentially delaying refunds for some taxpayers. While a significant number of ITRs have been filed and verified, about 1.2 crore returns are still pending.
Mandatory Scrutiny and New Rules
Under the new regulations, a full scrutiny of an ITR involves a comprehensive review of a taxpayer’s entire financial record, including all income, deductions, and investments.
Your ITR may be subject to mandatory scrutiny if your case falls under any of the following categories:
- Survey Cases: Your premises were surveyed under Section 133A after April 1, 2023.
- Search and Seizure Cases: You underwent a search or had documents seized under Sections 132 or 132A between April 1, 2023, and March 31, 2025.
- Claim of Exemption After Registration Cancellation: Your trust or institution’s registration under Sections 12A, 12AB, 10(23C), or 35(1)(ii)/(iii) has been canceled, but you still claim exemptions.
- Repeated Additions: There were additions to your income of over ₹50 lakh in a metro city or ₹20 lakh in other regions during a prior assessment, and this addition was not rejected on appeal.
- Information from Investigating Agencies: Your return was flagged based on credible information from agencies like the CBI or ED.
What This Means for Taxpayers
If you fall into any of these categories, you should expect a thorough review of your return, which could extend the processing time. Experts advise that you cannot avoid receiving a notice under Section 143(2) if your case is subject to mandatory scrutiny. It is important to have all supporting documents ready to respond promptly and avoid further delays.
Returns filed after receiving a notice under Section 142(1) or those with limited third-party information are not automatically subject to this detailed scrutiny. They may, however, still be selected for assessment through the Computer Assisted Scrutiny Selection (CASS) system.
Checking ITR and Refund Status
You can track the status of your ITR and refund on the Income Tax Department’s e-filing portal. Log in, go to “e-File,” select “Income Tax Returns,” and then click “View Filed Returns” to see the current status.
Common reasons for a refund delay include:
- Incorrect or unvalidated bank account details.
- Discrepancies between your ITR information and Form 26AS or AIS.
- Pending tax demands from previous years.
If your refund fails, you can request a reissue through the “Services” tab on the portal.
With the ITR deadline approaching, the department urges taxpayers to ensure e-verification and accurate documentation to avoid last-minute complications.