The Central Board of Direct Taxes (CBDT) has released fresh data showing a clear trend: that income tax refunds have fallen sharply in FY 2025-26 even as net direct tax collections in India continue to grow.
Income Tax Refunds Down by 24%
From April 1 to September 17, 2025, the government issued income tax refunds worth Rs. 1.61 lakh crore. This is 24% lower than the Rs. 2.10 lakh crore released during the same period last year.
Many taxpayers report that their ITR refunds are still pending even though their income tax returns are marked as “processed” on the e-filing portal. Tax experts suggest that the drop is linked to:
- Stricter scrutiny of deductions and exemptions claimed
- Slower pace of refund issuance by CBDT
- Greater monitoring of suspicious or inflated refund claims
This slowdown has especially hit non corporate taxpayers where refunds are said to be down by nearly two-thirds compared to last year.
Net Direct Tax Collections Rise 9%
While refunds have dropped, direct tax collections in India are rising steadily. The government has collected Rs. 10.82 lakh crore in net direct taxes which indicates growth of 9.18% year on year between corresponding period of last year i.e. 1st April to 17th September.
Breakdown of collections:-
- Corporate tax: Rs. 4.72 lakh crore (slightly higher than last year’s Rs. 4.50 lakh crore)
- Non-corporate taxpayers: Rs. 5.84 lakh crore (up from Rs. 5.13 lakh crore last year)
- Securities Transaction Tax (STT): Rs. 26,306 crore, nearly flat compared to last year
The Government has set a direct tax target amounting to Rs. 25.20 lakh crore for F.Y. 2025-26 which is approx 12.7% higher than the previous year’s collections.
What Taxpayers Should Know:
- Refund delays may affect liquidity:- Many assessees/ taxpayers are dependent on timely refunds for cash flow may face difficulties.
- Government has benefit from slower refunds:- Net collections shows stronger in case of late issue of refunds.
- Strict compliance checks:- It is expected that more detailed verification of deductions, exemptions and claims will be made before the approval of refunds.
FAQs on Income Tax Refunds 2025
Q1. What is the reason for delayed income tax refund for 2025 ?
Refunds are slower this year because of strict scrutiny by CBDT enhancing verification of deductions and a slower pace of refund issuance.
Q2. How much have refunds dropped this year?
Between April and September 2025, refunds issued were Rs. 1.61 lakh crore i.e. 24% lower than the same period last year.
Q3. When income tax refunds for 2025 will be credited?
As per the trend, most refunds are usually processed within 20 – 45 days after processing of ITR. However, due to strict checkings, many refunds are taking longer time. Taxpayers are advised to check their ITR refund status regularly on the income tax e filing portal.
Q4. Does delay mean refund is rejected?
Not absolutely. Delay in credit of Refund may have reason that the return is under verification. If additional documents are required, the Income Tax Department may send a notice or intimation before making any adjustment.
Q5. What is the CBDT’s direct tax collection target for F.Y. 2025-26?
The government has set a target of Rs. 25.20 lakh crore which indicates 12.7% higher than last year’s collection.
Conclusion
The rise in direct tax collections reflects stronger compliance and positive revenue growth for the government. However, fall in issue of income tax refunds by 24% raises anxieties for taxpayers especially those waiting for months for their ITR refunds in 2025. It would be important to see that as the financial year progresses, whether CBDT speeds up refund issuance or whether delays remain a pain point for taxpayers.
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