ITR Filing: Verified but not processed? Know what to do next

ITR Filing: Millions of taxpayers across India are gearing up for the approaching income tax return (ITR) filing deadline, which is 15 September.

Filing ITR is only half the job done. Once the taxpayers file their ITR, they need to verify it. After verification, it is processed by the tax department and once the processing is done, taxpayers can see the ‘processing completion’ notification in the tax filing portal. If taxpayers fail to e-verify their ITR within 30 days, their return becomes invalid which could lead to delayed refunds and compliance issues.

Sometimes, even after verifying the ITR, it takes more than usual time for processing.

How long does it take for ITR to be processed?

Before filing the ITR, the taxpayers need to ensuring that the reported income, deductions, and taxes paid are accurate. After filing, they can e-verify their claim by using Aadhaar OTP and net banking. If they want to verify it physically, they must send a signed ITR-V form by post.

“Once the verification of the ITR is completed, the IT Department checks the claims for data accuracy and tax calculation mismatches,” said Balwant Jain, a tax and investment expert, adding that “the ITR will only be processed after this step, which may take anywhere between a few hours to 6 months, depending on the complexity of the composition of the income.”

The complexity of the composition of income varies from person to person. For instance, “ITR 1 is processed quickly because there is no capital gain and no business income,” he said. “Whereas an ITR filed by a person with capital gains such as from mutual funds and stocks takes more time to get processed,” he added.

Why your ITR processing is delayed?

The ITR processing system is usually on autopilot mode so an ITR gets processed easily when the declarations gets matched with the annual payment, Jain said.

“But if there is a capital gain or business income, then before processing it, the prima facie, which is Form 26AS and Annual Information Statement (AIS), is matched which is time-consuming,” Jain said.

In such cases, if the tax deducted at source (TDS) is not matching in both forms, then the ITR does not get processed.

Incorrect bank details and mismatched PAN and Aadhar details can also delay the process.

What Should you do if your ITR is not processed despite verification?

Once a taxpayer does their part of filing the ITR and verifying it, the responsibility of processing the claim lies entirely on the income tax (IT) department. In case a person’s income declarations do not match actuals, they receive a notice from the IT department regarding the mismatch. After that, the taxpayer must make the required changes in their ITR.

For example, if a person is receiving an interest in a Fixed Deposit (FD) and they don’t declare it in the ITR, they might get a notice. To avoid that, the taxpayer has two options, either report the gains on an accrual basis or a receipt basis before filing the ITR, Jain clarified.

Accrual basis which is the most common practice refers to declaring your gains from a FD on a year-on-year basis, where a taxpayer can take a certificate from the bank for every year’s interest or take a number from the AIS and put it in their ITR.

In cash basis or a receipt basis, you clearly mention that you will report the income when your FD matures and you receive the amount.

The IT department also has the authority to reject an ITR, however before taking that step, they will issue a notice of defective return to the taxpayer.

“The taxpayer will be given a chance to rectify that mistake. And if they do not rectify it, only then the ITR can be rejected,” Jain noted.