Bad News: Income Refund Delayed as CBDT Extends Deadline

The Central Board of Direct Taxes (CBDT) has recently issued an official order (Circular No. 07/2025) dated June 25, 2025, to give exemption to certain taxpayers. This is issued to address issues that occur with some of the ITRs filed after the normal deadline, however, with special permission (called condonation of delay) under Section 119(2)(b) of the Income Tax Act, 1961.

Section 119(2)(b) says that if any taxpayer has missed the due date for filing the ITR. He/She can still file ITR after the due date if he/she has a valid reason for missing the deadline. These requests are approved by specific authorities (Competent Authority), based on CBDT guidelines issued previously (Circulars No. 09/2015, 07/2023, and 11/2024). In that case, the taxpayer can apply for condonation of delay. If the authority approves the delay, he/she will be legally eligible to return even after the deadline.

Although these delayed returns were accepted by the Income Tax Department. However, it was not able to process them in time because of a technical error. According to Section 143(1), the department must process a return and send the intimation (notice) within the specified time limit. However, in many cases, the time limit ended, and taxpayers did not receive their refunds or any related update, even though their refunds were genuine.

In order to resolve this problem, the Central Board of Direct Taxes (CBDT) has decided to extend the time limit for processing such delayed ITRs. Henceforth, the department will process all ITRs that were:

• Filed via electronic means (online),
• On or before 31st March 2024, and
• Were filed after receiving approval under Section 119(2)(b).

According to the order, these delayed returns will now be processed, and intimation under Section 143(1) will be sent to the taxpayers by March 31, 2026. This exemption is not applicable if the department has already finished assessment or reassessment under Sections 143(3), 144, 144B, 153A, 153C, 147, or 148 for the relevant year after the return was filed.

Once the ITRs are processed, the following steps will be performed next:

• Taxpayers will be sent their refunds, if any, along with interest as applicable.
• But if your PAN is not linked with Aadhaar, the taxpayer will not receive the refund, even if you are eligible for one. This is based on an earlier rule (Circular No. 03/2023 dated 28.03.2023).

For the smooth processing of these delayed returns, the Director General of Income Tax (Systems), Bengaluru, will organise a necessary technical and processing system. The aim is to ensure that all intimation notices are sent by the set deadline, i.e., March 31, 2025.

Refer to the official circular for more information