InvestorQ : I filed my income tax returns in July 2020 for FY20. Can you throw some light on why income tax refunds are getting delayed, as I have still not get the refund?
Mitali Bhutta made post

I filed my income tax returns in July 2020 for FY20. Can you throw some light on why income tax refunds are getting delayed, as I have still not get the refund?

Answer
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2 weeks ago
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Actually you are not alone but there lakhs of people who filed returns early this year but have still not got the refund. The reason is a technical upgrade for faster processing of the ITRs and refunds which could be the major reason behind the delay. Most returns filed even in June and July at awaiting the refunds.

The new technologically upgraded platform called CPC 2.0 is expected to result in faster processing of ITRs and refunds. It has been decided to process of ITRs and refunds for AY 2020-21 on CPC 2.0 platform and the migration is still under progress and testing. However, no time line has been committed by the CBDT.

Generally, the refunds are automatic and are received within 2-3 months of filing the income tax returns in case of no major deficiency in the return. Most experts suspect that this delay could also be because the revenues have faltered for the government and this could be one way of liquidity management for the government.

This could seriously be a possible reason for the delay and also the most likely reason. Normally, the CBDT starts off by first processing the refunds up to Rs.1 lakh on priority and then goes over to the higher value refunds. Tax payers and chartered accountants have been persistently demanding more transparency in terms of refund time lines.

But, at the end of the day, these are extraordinary times and the government has a practical problem of revenue matching even as every economist worth his or her salt is calling upon the government to spend more. That could have led to the reduction in the speed of processing the refunds and that is also a logical cost that people pay.

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