An SMS or email lands referencing your income tax refund, and instead of saying “credited,” it says your refund is being held, adjusted, or needs your confirmation. Your first instinct might be to wonder whether the message is even genuine.
If you receive one, don’t click any links in the message. Log in to the Income Tax e-Filing portal directly and check Pending Actions or Worklist to verify whether there’s actually an action pending against your return.
A refund-related communication can generally point to one of three situations, and each requires a different response.
Reason 1: Your refund is being adjusted against an old demand
This is one of the most common reasons for a refund being held. Under Section 245, if you have an outstanding tax demand from an earlier assessment year, the department can adjust your current refund against that demand instead of paying the refund to you.
Before making the adjustment, the department sends you an intimation with the refund amount, outstanding demand, and proposed adjustment. You generally get 30 days to respond through the e-filing portal.
You can:
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Agree with the demand, allowing the adjustment to proceed.
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Partially agree and specify the amount you believe is correct, along with your reasons.
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Disagree with the demand and provide reasons and supporting documents.
If you don’t respond within the specified period, the department may proceed with the adjustment based on the outstanding demand.
If you don’t recognise the demand, don’t ignore it. It could relate to an older assessment year or an intimation you may have missed. Select “Disagree”, explain why you believe the demand is incorrect, and attach supporting documents such as proof of payment or details of a rectification request, where applicable.
Reason 2: CPC’s Risk Management Process wants confirmation
Not every refund-related communication is about an outstanding demand.
The Centralised Processing Centre (CPC) may select certain returns for verification under its Risk Management Process before releasing a refund. You may receive a communication asking you to confirm that the refund claim is correct or take corrective action, such as filing a revised return where appropriate.
Possible triggers can include discrepancies between deductions claimed in the return and information available with the department, unusual refund claims, or other data inconsistencies.
The response period can vary depending on the communication. Check the Worklist on the e-filing portal for the exact action required and deadline.
If you confirm that the information in your return is correct, the return can proceed for further processing. If there is an actual error, take the corrective action requested rather than simply confirming the claim.
Reason 3: Your refund failed for technical reasons
Sometimes a refund that appears to be “on hold” is simply a refund payment failure. There may be no tax demand or compliance issue involved.
Common reasons include:
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Incorrect or closed bank account details
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PAN and bank account name mismatch
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Invalid IFSC or other bank details
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Bank account not pre-validated on the e-filing portal
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KYC or other bank-side issues
In such cases, correcting your bank details and submitting a refund reissue request through the e-filing portal is generally the appropriate step.
You don’t need to respond to a Section 245 notice if there is no outstanding demand. The issue is with the refund payment itself.
How to tell the difference
A Section 245 communication and a refund failure are not the same thing, even though both can prevent you from receiving your refund.
A Section 245 communication concerns an outstanding tax demand and gives you an opportunity to respond before the refund is adjusted.
A refund failure is a technical or banking issue. There’s no demand to dispute; you need to correct the relevant details and request a refund reissue.
There are also circumstances where the department can withhold a refund while an assessment or reassessment is pending, subject to the applicable statutory conditions and approval requirements. This is different from a routine refund failure or adjustment against an existing demand.
What to do right now
Start with the e-filing portal, not the SMS or email.
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Log in to the Income Tax e-Filing portal directly.
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Check Pending Actions and Worklist for any communication or action.
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If it’s a Section 245 notice, respond within the specified deadline, even if you disagree with the demand.
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If it’s an RMS or refund verification request, review the return and respond through the portal.
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If it’s a refund failure, verify your bank account details, ensure the account is pre-validated, and submit a refund reissue request where required