22-07-2025
Is filing ITR tougher this year? Experts decode new tax return forms, tax refund delays, and stricter scrutiny
Has the ITR filing process become tougher this year with the introduction of new forms and utilities?
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Many people usually file their ITR to claim an income tax refund. Will there be a delay in income tax refunds this year due to the late release of ITR utilities, date mismatches, etc.?
Will there be increased scrutiny of ITRs this year, and is the process more stringent than before?
As the tax filing season for FY 2024-25 (AY 2025-26) begins, taxpayers are preparing to file their Income Tax Return ( ITR ). However, this year's ITR filing experience will be different from previous years due to several modifications introduced by the Income Tax Act of 1961 for FY 2024-25, which are proving to be a challenge for many taxpayers. The revised ITR forms for FY 2024-25 (AY 2025-26) and a more rigorous data collection and verification process have raised concerns about the increased complexity of filing ITR this Wealth Online spoke to several tax experts to gain insights into the changes in this year's ITR filing process, the reasons behind the increased complexity, and the potential for enhanced scrutiny by the Income Tax changes introduced in the ITR filing this year have significantly increased the complexity of the ITR filing process. This includes providing details to claim various deductions and exemptions, as well as capital gains bifurcations depending on the date of asset sales, among other things. According to tax experts, while the modifications aim to improve transparency and ensure accurate reporting, they have also increased the level of diligence and preparation required by read: ITR filing last date for FY 2024-25 is not same for all: Check due dates for salaried individuals, professionals, companies, proprietorship firms, other taxpayers Tarun Kumar Madaan, a practicing chartered accountant (CA), says, "While the fundamental structure of the ITR forms has not undergone a complete overhaul, the detailed information and disclosures required within them have expanded significantly this year, presenting new challenges for taxpayers. The primary issue has been the delayed release of ITR-2 and ITR-3 utilities, which are essential for individuals with capital gains, foreign income, or business/professional income. While ITR-1 and ITR-4 utilities were made available earlier, the significant delay in releasing ITR-2 and ITR-3 (until mid-July 2025) meant that although the filing season officially began, it could not commence in full swing for a large section of taxpayers. Though the due date has now been extended to September 15, 2025, the reduced effective filing window has led to considerable stress and backlog."Suresh Surana, a practicing CA, concurs, saying, "Yes, the process of filing ITR has become more complex this year, primarily due to the introduction of revised ITR forms. The Income Tax Department released the Excel utilities for ITR-1 and ITR-4 in late May 2025, whereas the utilities for ITR-2 and ITR-3 were made available only on 11 July 2025, significantly delaying the start of the filing window for taxpayers with more complex income structures. There are key structural changes in the ITR forms that have contributed to the increased compliance burden. Taxpayers are now required to provide detailed disclosures of capital gains, including bifurcation based on gains accrued before and after the Finance Act amendments effective from July 23, 2024. Additionally, detailed requirements are now required. For instance, to claim deductions or exemptions, taxpayers must furnish policy numbers, landlord PAN details for HRA claims, and insurer details for health insurance deductions. These requirements necessitate thorough record-keeping and accurate data input."Also read: Income Tax Dept cracks down on bogus claims of tax deductions like 80GGC; What can taxpayers do? The threshold for mandatory disclosure of assets and liabilities has been revised upwards from Rs 50 lakh to Rs 1 crore this year. "While this may offer relief to some, those falling within the reporting threshold must still comply with rigorous asset classification and disclosure norms. Moreover, any mismatch between the taxpayer's financial profile and the ITR form selected, such as choosing ITR-1 despite having capital gains exceeding Rs 1.25 lakh, may trigger defect notices and render the return invalid," Surana told ET Wealth Online."Over 1.08 crore returns for AY 2025-26 have already been verified and processed out of 1.27 crore filed returns. This year, the income tax refunds are witnessing delays primarily due to a combination of systemic and procedural factors. One of the key reasons is the delayed release of ITR utilities. While ITR-1 and ITR-4 utilities were made available by the end of May 2025, utilities for ITR-2 and ITR-3 were released only on July 11, 2025. This significantly compressed the window for the timely filing and processing of returns, causing a cascading delay in refund issuance," Surana told ET Wealth with this view, Madaan says, "Yes, the delay in releasing ITR utilities, particularly for taxpayers with capital gains, has directly contributed to delays in income tax refunds. Many taxpayers expecting refunds were unable to file their returns on time and, therefore, could not initiate their refund claims. Since refunds are processed only after the return is filed and verified, this delay has had a cascading impact."Apart from the delay in releasing ITR utilities, other reasons can also impact the income tax refunds. Surana says, "Refunds may be held in cases where there are pending assessments or outstanding tax demands from earlier years. In such scenarios, the department may adjust the current year's refund against past dues, which can prolong the refund process until the issue is resolved.""Refunds may be withheld or adjusted if there are mismatches between the tax return and data in Form 26AS, Annual Information Statement (AIS), or Taxpayer Information Statement (TIS), or if there are outstanding demands or pending assessments from previous years. However, the department is obligated to pay interest on delayed refunds under Section 244A of the Income Tax Act. This interest typically applies from April 1st of the assessment year, if the tax return is filed by the due date, or from the date of filing if it is filed after the due date, until the date the refund is issued," Madaan told ET Wealth says, "The tax department's increased use of data analytics and artificial intelligence to cross-verify information means that discrepancies are identified much faster and more frequently than before. If there are mismatches or underreported income, especially in high-value transactions, the system automatically flags the tax return and proposes an adjustment. To avoid such notices or delays, it is crucial for taxpayers to meticulously cross-verify their return data with Form 26AS, AIS, and TIS before submission. This year, accuracy and data matching are more important than ever."Surana says, "The tax department has introduced more comprehensive reporting requirements across various sections, from capital gains to claiming deductions, which further enhances the level of detail that taxpayers must provide. This increased scrutiny is likely to be complemented by enhanced automated systems designed to flag inconsistencies or missing details, making the process both more precise and more stringent. As a result, taxpayers can expect a higher likelihood of receiving tax notices for further clarification or audit, particularly if their tax returns show discrepancies or fail to meet the updated disclosure norms. Overall, the filing process has now become more meticulous. Any inconsistencies, particularly in high-value refund claims, house rent allowance (HRA) deductions without adequate substantiation, or capital gains and crypto income reporting, would be flagged for further scrutiny, including issuance of notices."
