Your Income Tax Refund for A.Y. 2021-22 may be delayed. Here’s why


The Covid-19 has adversely affected the whole Indian Economy and almost all businesses and individuals are suffering heavy losses. Nevertheless, the taxpayers are required to pay taxes which have become a burden for all the taxpayers. Moreover, the income tax refund not received for the year A.Y. 2020-21.

After the first wave of Covid19 in early 2020, business were coming on track slowly however, in April 2021 the second wave of novel corona virus has again shattered many lives and Indian economy.

Generally, the due-date for filing ITR forms in non-audit case is 31st July of a relevant assessment year unless it is extended by the authority. When assesses file return of income, it is processed by IT Authorities and ultimately they issue the refund to the respective taxpayers generally within 3-4 months from the date of filing ITR. The CPC orders the Income tax refund banker to transfer the refund amount to the respective taxpayers.

If we talk about last assessment year’s due date of filing ITR for non audited case was extended till 10th January 2021 (without any penalty). Consequently, many taxpayers are still struggling as income tax refund not received even if they had filed their return of Income earlier, as the whole process of filing returns and issuing refunds has been delayed.

Keeping in view the current situation of India, the government has already extended the due date for filing ITR for A.Y. 2021-22 by two months i.e. from July 2021 to September 2021. Extension of due date of filing ITR will ultimately lead to delay of whole process of ITR filing, its processing and issuing of Income Tax refunds.  This delayed process will affect those taxpayers who has paid excess tax in form of TDS (generally) and eligible to get the same as refund. So, we can say one thing for sure that ITR refund time for A.Y. 2020 – 21 would be delayed. Now the question arises that whether the income tax refund for this year will be delayed only due to Covid pandemic or there are other factors that may cause this delay.

This blog will help you to understand the possible reasons for probable delay in Income tax Refund for A.Y. 2021-22.

Firstly, let’s understand what is Income Tax Refund.

In common parlance, when a taxpayer has already paid tax either as an Advance Tax, TDS, Self Assessment tax and at the end of the F.Y his actual tax liability is less than the already paid taxes, in such case upon filing Income tax return he will claim excess amount of tax as a refund from the Income Tax Authorities.

Menacingly, tax refund is the reimbursement of an excess amount paid as tax by the taxpayers.

In India, the concept of tax refund is dealt under Sections 237 – 245 of the Income Tax Act, 1961.

There could be many reasons for the probable delay in processing Income Tax Refund for A.Y. 2020-21 or for income tax refund not received. Let’s discuss some of such reasons as under –

  1. As we have already discussed above that, refund of many taxpayers for the A.Y. 2020 – 21 is still pending as the whole processing system of ITRs was delayed for this year primarily because of Covid19. Since, refund for A.Y. 2020 – 21 is pending, so following the general practice, the government will process & issue refund of A.Y. 2020 – 21, which may lead to delay in processing of ITRs of A.Y. 2021 – 22 & ultimately issue of refund of this year.
  1. Another reason for probable delay of issue of refund for A.Y. 2021 – 22 could be that already last date of filing of ITR in non – audit cases has been extended by 2 months i.e. 30th As of now we don’t know how long this Covid situation will remain in the country and ultimately when assesses would be filing their ITRs. As date has already been extended which may extend further as well, this will lead to delay in whole processing system of ITRs and refund.
  1. Now if we talk about the main reason for income tax refund pending for A.Y. 2021 – 22, it is Covid pandemic. Covid has impacted every individual of the country either emotionally or financially and in many cases both emotionally & financially. In the same way it has impacted the government also. As the government has spent and is still spending huge funds and economic resources in handling the Covid crisis by providing medical, food and other facilities/services. Providing such reliefs is and will be priority of Indian government until the country get back to normal situation. This could also be the reason of probable delay in Income tax refunds for A.Y. 2020 – 21 as we have discussed that government will utilise its fund on priority basis and as of now providing reliefs and getting back country to the normal situation is foremost priority of government.
  1. Many of us don’t know that the Income tax E filing Portal is going under technical up-gradation. Since, many taxpayers were facing technical issues on the IT portal so the IT department has decided to upgrade the income tax filing portal (and named it as CPC 2.0 for jhatpat ITR processing) with an aim to provide fast processing of ITRs on CPC 2.0 from A.Y. 2020-21. This platform will also provide pre-filled ITRs as announced in Budget 2021.

This portal will be working from 7th June and will take long time in migrating the ITR processing to new platform CPC 2.0.

Moreover, CPC 2.0 would be absolutely a new platform and it will take time for every ITR filer to understand this new system. Thus, there is a huge possibility of mistakes in ITR filing due to which ITR processing can be delayed which would ultimately result in delay of ITR refund time.

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Consequently, the income tax refund for A.Y. 2021-22 probably be delayed and thus last date of filing itr will be postponed. There could be many reasons for such delay and among which above-listed are the most significant ones. However, the government should take an extraordinary step in this unordinary pandemic and must bring a transparent and secured mechanism for processing refunds and to inform the time-limit for receiving tax refunds to the taxpayers.

Knowledge Source:

Residential Status of Individual for Income tax

Income from House Property under Income Tax Act, 1961

Income Tax Returns 2021-22: Here are the financial transactions that will get reported to the I-T Department

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