CBDT Extends Processing of Late-Filed ITRs (Under Condonation): Refunds Allowed Till March 2026

Table of Contents

1. Introduction
2. Section 119(2)(b) and Historical Context
3. Key Highlights of CBDT Circular No. 7/2025
4. Who Is Eligible for This Relief?
5. Refund Processing and PAN-Aadhaar Linkage
6. What Tax Professionals Should Do Now
7. FAQs

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1. Introduction

In a major relief to taxpayers who filed their ITRs late under condonation, the CBDT has issued Circular No. 7/2025 extending the processing timeline of such returns up to 31 March 2026. This move will enable long-pending refunds to be processed even if statutory timelines had lapsed due to technical delays.

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2. Section 119(2)(b) and Historical Context

Section 119(2)(b) of the Income-tax Act empowers CBDT to admit belated returns filed beyond the due date, particularly where refunds or loss carry-forwards are involved. Over the years, circulars like 09/2015, 07/2023, and 11/2024 provided windows for such condonations.

However, these returns—though accepted—sometimes remained unprocessed due to portal limitations and time-bar constraints under Section 143(1).

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3. Key Highlights of CBDT Circular No. 7/2025

• Scope: Applies to ITRs filed electronically up to 31 March 2024 under condonation orders
• Processing timeline extended: Returns can now be processed under Section 143(1) until 31 March 2026
• Refund eligibility: Taxpayers will receive refunds with interest, as applicable
• No assessment must be pending under Sections 143(3), 147, 153A, or 153C

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4. Who Is Eligible for This Relief?

Taxpayers are eligible if:

• They had applied for condonation of delay and their ITRs were admitted by CBDT
• The returns were filed electronically on or before 31 March 2024
• There are no pending scrutiny or reassessment proceedings

This mainly benefits those who missed earlier deadlines due to medical emergencies, technical glitches, or genuine hardship cases.

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5. Refund Processing and PAN-Aadhaar Linkage

Refunds will be issued post-processing of returns. However, the CBDT has added a crucial caveat: PAN must be linked to Aadhaar. Without this linkage, refund processing will not be completed.

Taxpayers should immediately verify their PAN-Aadhaar linkage status on the income tax portal and complete it if pending.

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6. What Tax Professionals Should Do Now

Chartered Accountants and tax consultants should:

• Review their client base for any belated ITRs filed under condonation
• Check if returns were processed or are still pending
• Ensure PAN-Aadhaar linkage
• Track refunds due and raise grievances if delays persist post-31 March 2026

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7. FAQs

Q1. Does this apply to paper-filed ITRs?
No, only electronically filed returns are eligible for this extended processing window.

Q2. Can I now file a new delayed return and get refund under this circular?
No, this applies only to returns already filed under valid condonation orders by 31 March 2024.

Q3. What if there is a minor defect in the return filed?
The CPC may issue a notice under Section 139(9). Taxpayers should respond quickly to avoid further delay.

Q4. Will interest under Section 244A be paid on delayed refunds?
Yes, eligible interest will be paid on refunds from the date of