Income Tax Refund: How to Claim & Track Status? FY 2025-26
An Income Tax Refund is the amount that the Income Tax Department pays back to a taxpayer when the tax paid during a financial year is more than the actual tax liability. This extra amount usually gets deducted through TDS, TCS, advance tax or self assessment tax, and taxpayers can claim it back only by filing their Income Tax Return correctly and on time. At Startup Portal, our business services experts, Nikhil Rajarshi and Govind S. Jethani, who carry more than 8+ years of experience in helping business owners with tax and compliance processes, have put together this simple guide to help you understand everything about claiming and tracking your Income Tax Refund for FY 2025-26 (AY 2026-27).
If you have paid excess tax this year, this guide will walk you through the entire process, from filing your ITR correctly to checking the status of income tax refund online, understanding refund processing time, and knowing what to do in case of income tax refund delay.
What is an Income Tax Refund?
In simple words, an Income Tax Refund is the money the government returns to you when you have paid more tax than what you actually owe. For example, if your employer deducted TDS of Rs 25,000 during the year, but your actual tax liability turns out to be only Rs 18,000, then the difference of Rs 7,000 becomes your tax refund income.
This extra tax may arise because of higher TDS deduction by your employer or bank, advance tax paid on estimated income, or self assessment tax paid at the time of filing. Once your ITR is processed and confirmed by the department, the refund amount is directly credited to your validated bank account.
Who is Eligible for a Tax Refund?
You become eligible for a tax refund when the total tax already paid through TDS, TCS, advance tax or self assessment tax is higher than your final tax liability for the year. However, there is one important condition here. You must file your Income Tax Return within the due date, or as a belated return, to actually claim this refund. If you skip filing your ITR altogether, you lose the right to claim the eligible refund, no matter how much excess tax you have already paid.
How to Claim Income Tax Refund?
Select the correct ITR form:
Your ITR form depends on your income sources, residential status and income structure. Using the wrong form can lead to processing errors and delay your refund settlement.
Calculate your actual tax liability:
Report all income, deductions and exemptions accurately in the filing utility so that the correct refund amount gets calculated automatically.
Cross check TDS details:
TDS figures are usually auto populated from department records. Match these carefully with your Form 16 and Form 26AS before submitting your return.
Enter correct bank account details:
Since refunds are credited electronically, any mistake in your bank account number or IFSC code can hold up or delay your refund credit.
E-verify your return without delay:
Complete e-verification of your ITR as early as possible. This is one of the biggest factors that decide how fast your refund gets processed.
Once these steps are completed correctly, the Income Tax Department processes your return and transfers the refund amount directly into your bank account.
How to Check Income Tax Refund Status Online for AY 2026-27?
Many taxpayers often ask how to check ITR refund status after filing their return. There are three simple and reliable ways to check the status of income tax refund online.
1. Through the Income Tax e-Filing Portal:
This is the most commonly used method to check income tax refund status.
- Visit the official income tax e-filing portal.
- Log in using your PAN and password.
- Go to “e-File”, then click on “Income Tax Returns” and select “View Filed Returns”.
- Click on “View Details” against the relevant assessment year.
- Your income tax refund status will be displayed on the screen.
2. Through the NSDL / Protean Portal:
If you want another quick way to check refund status, this portal works well too.
- Open the NSDL e-PAN Protean portal.
- Enter your PAN number and select the correct assessment year.
- Enter the captcha code and click on “Proceed”.
- Your refund status will appear instantly.
3. Through the TRACES Portal:
This method also helps you view your income tax return refund status along with your tax credit details.
- Log in to the income tax e-filing portal using your PAN and password.
- Go to “e-File” and select “View Form 26AS”.
- You will be redirected to TRACES. Select the checkbox and click “Proceed”.
- Click on “View Tax Credit (Form 26AS)”.
- Choose the assessment year and set the view format to “Text”.
- You will be able to see refund paid, credit amount and date of payment.
You can use any of these three ways to check refund status in income tax portal as per your convenience.
How is Income Tax Refund Calculated?
Understanding how income tax refund gets calculated becomes easier with an example. Suppose Mr. A has the following details for FY 2025-26 (AY 2026-27):
- Gross Salary: Rs 20,00,000
- Interest from Savings Account: Rs 20,000
- Employer’s Contribution to NPS under Section 80CCD(2): Rs 50,000
- Taxes already paid: Rs 1,90,000
As shown above, since the taxes already paid are higher than the actual tax liability, Mr. A becomes eligible for a refund of Rs 3,840.
Income Tax Refund Status Messages Decoded:
Once you check your refund status, the message shown can sometimes feel confusing. Here is a simple breakdown to help you understand each status better.
Income Tax Refund Time: How Long Does it Take?
One of the most searched questions is about income tax refund time and how long the entire process takes. The refund processing time largely depends on which ITR form you have used.
This refund processing time generally starts only after successful e-verification of your ITR. Simple forms like ITR-1 and ITR-4 are usually processed faster, while ITR-2 and ITR-3 may take longer due to additional checks. Keeping your bank details pre-validated and filing an error free return can help speed up the process significantly.
Why is my Income Tax Refund Delayed?
If you are facing income tax refund delay 2026, here are the most common reasons behind delay in income tax refund:
- Enhanced verification process: Returns are being checked more thoroughly this year, especially where higher deductions have been claimed, leading to income tax return delayed cases.
- High value refund claims: If your refund amount is higher than usual or above Rs 50,000, the department may take extra time to verify the claim.
- Mismatch with Form 26AS or AIS: Any difference between your reported income and the data in Form 26AS or AIS can cause delay in refund of income tax. It is always advisable to give feedback if the AIS data itself looks incorrect.
- Filing close to the due date: Returns filed near the deadline often face processing delays simply because of the high volume of filings during that period.
- Incorrect or inactive bank account: Your refund cannot be processed if your bank account is not pre-validated or has become inactive.
- Pending tax demand notices: The department can withhold your refund if there is any earlier tax demand that is still unresolved.
- Pending e-verification: Your ITR filing remains incomplete until it is e-verified, and an unverified return simply cannot move forward for refund processing.
If your refund is delayed beyond the expected timeline, you always have the option to raise a grievance directly on the income tax portal.
How to Raise Income Tax Refund Reissue Request?
In case your refund has failed due to incorrect bank details or any other reason, you can request a reissue by following these steps:
- Log in to the e-filing portal using your PAN and password.
- Go to the “Services” menu and select “Refund Reissue”.
- Click on “Create Refund Reissue Request”.
- Select the relevant assessment year for which the refund failed.
- Update and validate your correct bank account details.
- Submit the request and complete e-verification.
Interest on Income Tax Refund (Section 244A):
If the department delays your refund beyond the prescribed time, you are entitled to receive interest on that refund amount under Section 244A of the Income Tax Act. This interest is calculated at the rate of 0.5% per month, which works out to about 6% per annum, starting either from the date of tax payment or the beginning of the assessment year, depending on the type of tax paid, until the refund is actually issued.
This is one of the most searched queries under itr interest delayed refunds, and it is a helpful provision that compensates taxpayers for the waiting period.
Refund Adjusted Against Old Tax Demand:
Sometimes, even after your ITR shows a refund due, the amount may not be credited to your account. This usually happens when you have a previous outstanding tax demand pending with the department. In such cases, the department is authorised to adjust your current refund against the older due amount, and only the balance, if any, gets credited to you.
Is Income Tax Refund Taxable?
This is a common doubt among taxpayers, especially around income tax on tax refund. The good news is that the refund amount itself is not taxable, since it is simply your own excess money being returned to you. However, if you receive interest on that refund under Section 244A, this interest amount is taxable under the head “Income from Other Sources” as per your applicable income tax slab rate.
Income Tax Refund Helpline:
If you need help regarding your refund, you can reach out through the following:
- 1800 103 0025
- 1800 419 0025
- International callers: +91-80-46122000 or +91-80-61464700
- Email: refunds@incometax.gov.in
For payment related queries, SBI Contact Centre: 1800-425-9760
Need Help With Your Income Tax Refund?
Filing an accurate ITR and tracking your refund on time does not have to be stressful. At Startup Portal, our tax experts, Nikhil Rajarshi and Govind S. Jethani, bring over 8+ years of experience helping individuals and business owners file error free returns, resolve refund delays, and stay fully compliant with the Income Tax Department.
Get in touch with our experts today and let us handle your Income Tax Refund process from start to finish, so you get what is rightfully yours, without the wait or the confusion.
Frequently Asked Questions:
ITR return, or Income Tax Return, is a form used to report your income, deductions and taxes paid to the Income Tax Department for a financial year. Filing it correctly is compulsory if you want to claim any excess tax paid as a refund.
You can check the status of income tax refund through the income tax e-filing portal, the NSDL Protean portal, or the TRACES portal by logging in with your PAN details and selecting the relevant assessment year.
Delay in income tax refund can happen due to reasons like mismatch with Form 26AS or AIS, high value refund claims, pending e-verification, incorrect bank details, or pending tax demand from earlier years.
Generally, ITR-1 refunds are processed within 7 to 20 days, while ITR-2 and ITR-3 may take anywhere between 15 to 60 days, depending on the complexity of income and verification requirements.
You can check your refund status using your PAN number by logging into the income tax e-filing portal or the NSDL Protean portal and entering your PAN along with the relevant assessment year to view your current refund status.