Complete guide to income tax refunds for FY 2025-26: when you qualify, how to check status on the e-filing portal and NSDL, all refund status messages decoded, Section 244A interest when IT delays your refund, how to raise a reissue request, and what to do when your refund is adjusted against an old demand.
Refund Quick Reference
When Are You Eligible for a Refund?
How Is Refund Calculated?
How to Check Refund Status
All Refund Status Messages Decoded
Why Is My Refund Delayed?
How to Raise a Refund Reissue Request
Section 244A — Interest on Your Refund
Refund Adjusted Against Old Demand
FAQs on Income Tax Refunds
Excess TDS by Employer (Most Common)
Your employer deducts TDS based on projected annual income and declared investments at the start of FY. If the actual deductions claimed in your ITR are higher than what the employer accounted for, you get a refund.
You declared HRA exemption or 80C investments late in the year — employer already deducted extra TDS
You changed jobs and the new employer did not account for the old employer's salary, deducting fresh TDS
Salary was lower than projected (leave without pay, loss of pay) but TDS was calculated on higher projection
Excess TDS by Bank (FD Interest)
Banks deduct TDS at 10% on FD interest exceeding ₹40,000 per year (₹50,000 for senior citizens). If your total income falls below the taxable threshold, you can claim this TDS back as a refund.
Submit Form 15G (below 60 years) or Form 15H (60+ years) to avoid TDS on FD if income is below basic exemption
If TDS was already deducted, claim it back in ITR under Schedule TDS
Include FD interest under Schedule OS; cross-check with Form 26AS Part A
Advance Tax Overpaid
Self-employed professionals and business owners pay advance tax in instalments. If the actual income for the year is lower than estimated, excess advance tax becomes a refund.
Freelancers who expected higher income but received fewer projects during FY 2025-26
Investors with capital losses that wiped out expected capital gains
Senior citizens who paid advance tax unnecessarily (they are exempt if no business income)
Deductions Not Submitted to Employer
Deductions you are eligible for but did not submit investment proofs to your employer in time — the employer deducted full TDS but your actual tax liability is lower after deductions.
80C investments: ELSS, PPF, NSC, LIC premiums declared late or partially
Section 24B home loan interest not intimated to employer
Section 80D health insurance premium not submitted
80E education loan interest — most employers do not accept this, claim in ITR directly
Formula
Refund = (TDS + Advance Tax Paid + Self-Assessment Tax Paid) − Actual Tax Liability
Total tax paid = sum of all TDS entries in Schedule TDS (from Form 26AS) + advance/self-assessment tax in Schedule IT
Actual tax liability = tax on total income computed per ITR, after applying regime-specific slabs and rebate (Section 87A under old regime)
If total tax paid > actual liability → Refund due; If less → Balance tax payable
Worked Example — Salaried Employee
Kavya is a salaried employee. Gross salary ₹9 lakh, employer deducted TDS ₹72,000 but she claimed 80C (₹1.5L), 80D (₹25,000) and standard deduction (₹75,000) in her ITR.
Gross income: ₹9,00,000
Less: Standard deduction (₹75,000) + 80C (₹1,50,000) + 80D (₹25,000) = ₹2,50,000
Taxable income: ₹6,50,000
Tax under old regime: ₹32,500 + cess 4% = ₹33,800 (rounded)
TDS already paid: ₹72,000
Refund due: ₹72,000 − ₹33,800 = ₹38,200
New Regime — Lower Tax, Smaller Refund
Under the new regime (default FY 2025-26), most deductions are unavailable. Refunds arise mainly from TDS overcalculation or when 87A rebate brings tax to zero.
New regime slab rates are lower (0% up to ₹4L, 5% up to ₹8L, etc.) — the tax itself is less
Section 87A rebate under new regime: income up to ₹12L → tax = ₹0 (rebate of up to ₹60,000)
If employer deducted TDS before 87A rebate was announced or applied — entire TDS becomes a refund
Example: Income ₹11L, new regime → tax before rebate ≈ ₹55,000; after 87A rebate → ₹0; refund = ₹55,000
Method 1 — Income Tax e-Filing Portal (Recommended)
The official e-filing portal shows both ITR processing status and refund status in one place.
Go to incometax.gov.in → Log in with PAN
Navigate to e-file → Income Tax Returns → View Filed Returns
Select AY 2026-27 — see current status, refund amount, and date of refund if paid
Status updates within 24–48 hours of any processing action by CPC
Method 2 — NSDL / Protean Refund Status Portal
tin.tin.nsdl.com (now Protean eGov) shows real-time refund bank transaction status after CPC sends funds to the refund banker (State Bank of India).
Visit tin.tin.nsdl.com → Services → Status of Tax Refunds
Enter PAN, Assessment Year (2026-27) and the captcha code
Click Proceed — shows whether refund was successfully paid to your bank or bounced
More useful for confirming actual bank credit; use e-filing portal for ITR processing status
Method 3 — SMS Notification
CPC sends an SMS to your Aadhaar/portal-linked mobile when refund is credited.
SMS from ITDCPC: "Your IT refund of ₹XXXXX has been credited to your account on DD/MM/YYYY"
Ensure your mobile number is updated on the e-filing portal and linked to Aadhaar
Also check your email — an email confirmation is sent simultaneously
When to Raise a Reissue Request
Raise a reissue request when your refund status shows "Refund Failure" or "Refund Returned to IT Dept" — meaning the bank transaction failed.
Bank account was closed at the time of refund credit
Wrong account number or IFSC entered in ITR
Account is not ECS-enabled (some cooperative bank accounts)
Bank name changed after merger (e.g., old Vijaya Bank → Bank of Baroda)
Step-by-Step Reissue Process
Raise the request online — it is processed within 15–30 working days after approval.
Log in to incometax.gov.in with PAN
Go to e-file → Income Tax Returns → View Filed Returns → AY 2026-27
Click "Refund Reissue" link (visible only when status is Failure or Returned)
Select the correct pre-validated bank account for reissue
If the correct bank account is not available, add and pre-validate a new account first: Profile → My Bank Account → Add
Submit the request — you will get a service request number for tracking
How to Pre-Validate a Bank Account
All refunds are issued only to ECS-linked, pre-validated bank accounts. Pre-validate before filing to avoid reissue delays.
Log in to e-filing portal → Profile → My Bank Account
Click "Add Bank Account" → enter account number, IFSC, account type
OTP verification sent to mobile/email registered with your bank
Once validated, mark it as the refund account — "EVC Bank Account" toggle
Validation usually takes 1–2 working days
How Section 245 Adjustment Works
Section 245 allows the IT Department to set off your refund against any outstanding tax demand from prior years. They must notify you before adjusting.
You receive an intimation u/s 245 via email and on the e-filing portal
Intimation states: the refund amount, the demand being adjusted against, and the AY to which the demand relates
You have 30 days to respond — accept the adjustment or dispute the demand
If you do not respond within 30 days, the adjustment proceeds automatically
If the Old Demand Is Incorrect
Demands from old assessments may be errors, duplicate entries, or already paid demands still showing as outstanding. You can dispute them.
Check outstanding demands: e-file → Compliance Portal → Outstanding Demand
If demand is paid: click "Submit Response" → demand is incorrect → provide payment challan details
If demand is incorrect (wrong computation): file a rectification u/s 154 online
If demand is disputed (pending appeal): submit a response indicating "Demand in Dispute"
After response, CPC reconsiders the adjustment — if demand is valid, adjustment proceeds; if not, refund is released
If Partial Refund Is Released
When demand is less than refund, the balance (refund minus demand) is credited to your bank. The adjustment intimation shows the breakdown.
Example: Refund ₹25,000, outstanding demand ₹8,000 → ₹8,000 adjusted, ₹17,000 credited to bank
No reissue request needed — partial credit happens automatically
Keep the Section 245 intimation PDF for records — it acts as payment receipt for the adjusted demand
How long does it take to get an income tax refund?
For simple salary ITRs (ITR-1) filed on time and e-verified, refunds are typically credited within 20–45 days. Complex returns (ITR-2 with capital gains, ITR-3 for business income) or returns with AIS mismatches take 45–90 days. During peak season (July–August) delays of 60–90 days are common. If nothing happens after 90 days, raise a grievance on the e-filing portal.
How do I check my income tax refund status for AY 2026-27?
Two methods: (1) incometax.gov.in → Login → e-file → Income Tax Returns → View Filed Returns → Select AY 2026-27 — shows processing and refund status; (2) tin.tin.nsdl.com → Services → Status of Tax Refunds → Enter PAN + AY 2026-27 — shows bank transaction status after CPC dispatches the refund to SBI. Method 1 is more comprehensive; use Method 2 to confirm bank credit.
My refund status shows "Refund Failure" — what do I do?
Refund Failure means the bank rejected the credit — usually due to a wrong account number, closed account, or account not ECS-enabled. Log in to incometax.gov.in → e-file → View Filed Returns → AY 2026-27 → click "Refund Reissue". Select a valid, pre-validated bank account. If your current bank account is not pre-validated, add it first under Profile → My Bank Account, then raise the reissue request. Reissued refunds are credited within 15–30 working days.
Is the income tax refund amount taxable?
The refund principal (your own excess tax returned) is NOT taxable. However, Section 244A interest paid by the IT Department on your refund IS taxable — it is added to your income under "Income from Other Sources" in the year you receive it. If you get a refund of ₹50,000 + ₹2,000 interest, report ₹2,000 in Schedule OS of your next year's ITR. Form 26AS for the year of receipt will show this interest.
Why is my refund adjusted against an old demand I don't know about?
Check e-file → Compliance Portal → Outstanding Demand. The adjustment would have been preceded by a Section 245 notice to your registered email — check your email carefully. Old auto-generated demands arise from: TDS mismatch in a prior year (TDS in Form 26AS not matching ITR filed), missed income (interest, dividends), or interest u/s 234A/234B charged on late payment. If you believe the demand is incorrect, respond online: click "Submit Response" → Demand Incorrect → attach relevant proof. The CPC reviews and may reverse the demand and release the refund.
What is Section 244A interest and when do I get it?
Section 244A requires the IT Department to pay you interest at 0.5% per month on delayed refunds. You earn this interest only if: (1) your refund > 10% of tax assessed, and (2) the ITR was filed on time (by July 31, 2026 for FY 2025-26). Interest runs from April 1, 2026 until the refund date. If you filed late, interest runs from the date of filing. This interest is taxable in the year received.
Can I claim a refund if I filed my ITR after the July 31 deadline?
Yes — belated returns (filed by December 31, 2026) can still claim refunds. The only difference is: (1) Section 234F penalty applies (₹5,000 or ₹1,000 depending on income level), and (2) Section 244A interest on the refund runs from the date of filing, not from April 1, 2026 — so you lose interest for the pre-filing months. Refunds for belated returns take the same 20–45 days to process after e-verification.
My Form 26AS shows TDS but the refund amount in ITR is lower than expected. Why?
The most common reason: you are comparing pre-tax to post-tax numbers. The ITR refund is (total TDS from 26AS + advance/self-assessment tax) minus (actual tax liability computed per ITR). If the IT Department processed your return and changed your income (e.g., added AIS-reported income you missed), the liability increases and refund decreases. Check the Section 143(1) intimation sent to your email — it shows the department's computation vs. your ITR computation line by line. If the adjustment is wrong, file a rectification u/s 154.
I received a Section 143(1) intimation showing a demand, not a refund. What do I do?
Section 143(1) is the initial processing intimation — it shows whether ITR is accepted as-filed, or if there are adjustments. If it shows a demand: (1) Check if the demand is correct — compare intimation computation with your ITR line by line; (2) If you agree, pay the demand via Challan 280 (Self-Assessment Tax) within 30 days to avoid interest; (3) If you disagree, file an Online Correction u/s 154 or raise a grievance on the portal. Do not ignore — unpaid demands appear in the outstanding demand screen and may be adjusted against future refunds.
How long should I keep my ITR acknowledgement and refund records?
Keep ITR-V acknowledgement for at least 6 years from the end of the relevant FY — this is the standard statute of limitations for income tax assessments. For property-related ITRs where you claimed exemptions (54, 54EC), keep records for the entire holding period plus 6 years after sale. Store the ITR-V PDF, intimation u/s 143(1), Form 26AS, and all investment proofs. The e-filing portal also maintains your ITR records permanently — download PDFs for local backup.