Categories: Income Tax

ITR REFUND ALERT – READ THIS BEFORE 31 DECEMBER

ITR REFUND ALERT – READ THIS BEFORE 31 DECEMBER

  • The Income Tax Dept. has recently started issuing system-generated SMS/emails to taxpayers informing them that ITR processing and refund issuance have been put on hold under its Risk Management Framework due to discrepancies in refund claims. These communications are being widely seen for AY 2025-26 and represent a new compliance-driven approach.
  • Thousands of taxpayers are suddenly receiving messages like “Your ITR refund is on hold due to risk management discrepancies. File the revised return within a week.” The Income Tax Department takes 4+ months to flag the issue but gives taxpayers just a few days to fix it.
  • RMF is an internal, system-based mechanism used by the Income Tax Department to flag returns at the processing stage itself, even before issuing intimation under section 143(1). Returns may be flagged due to Unusually high or inconsistent refund claims, Mismatch with third-party data (AIS / TIS / 26AS), Inconsistency with past filing patterns, Deduction- or sector-specific risk parameters, Once flagged, refund processing is paused to allow voluntary correction.

Why No Detailed Email Received?

Because most of these are system-generated risk flags, not manual notices. Common reasons Email sent to old, registered ID; email lands in spam; only SMS/portal alert is triggered. The taxpayer must always check: Income-tax Portal → e-Proceedings / Worklist

What is a revised ITR?

A revised ITR (Section 139(5)) allows you to correct mistakes in your original return, such as missed income, wrong deductions or exemptions, the wrong ITR form, an incorrect refund claim, and calculation errors. Once filed, the revised return completely replaces the original return.

Quick Comparison: Revised ITR vs Belated ITR

Particulars Revised ITR Belated ITR
Purpose Correct mistakes Filed after due date
Section 139(5) 139(4)
Penalty No INR 1,000 – INR 5,000
Refund Allowed Allowed (with delay)
RMF Alert Recommended Not relevant

What Does “ITR Processing on Hold” Mean?

It is NOT a notice or scrutiny; it simply means the refund claim looks unusual compared to department data, the return is paused before refund issuance, and the taxpayer is given a chance to self-correct.

Common Reasons Refunds Get Flagged

  • TDS / TCS mismatch: TDS claimed > Form 26AS (employer/bank hasn’t deposited or corrected data)
  • AIS vs ITR mismatch: Interest, dividends, salary, etc. appearing in AIS but not fully reported in ITR
  • High refund vs past years: Sudden spike in refund triggers automated risk checks
  • Large deductions without matching data: HRA, 80C, 80D, home loan interest, losses, etc.
  • Employer correction pending: Employer files revised TDS return late → mismatch arises
  • Multiple revised returns: Frequent revisions raise “risk management” flags
  • Wrong head of income: Interest/business income/capital gains misclassification

What Should Taxpayers Do NOW?

  • Log in to income-tax portal
  • Reconcile ITR vs AIS + Form 26AS
  • If a mistake is found, the file is revised return before 31-12-2025
  • If return is correct, wait (refunds are usually released post-verification)

Timely action before 31 December can prevent refund delays, penalties, and unnecessary stress. Important Warning After 01-01-2026: Only updated returns are allowed & additional tax + penalty applies.

In summary, The revised ITR allows taxpayers to correct errors or omissions in the original return without any penalty. A belated ITR (filed after the original due date) may attract a penalty ranging from INR 1,000 to INR 5,000 under section 234F. The deadline for filing a revised ITR is the last day of the relevant AY 2025-26: 31 December 2025.

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