High Refund Claimants Are Receiving Emails from the Income-tax Department

By CA Surekha S Ahuja 

What It Really Means, Why It Happens, and the Right Way to Respond (AY 2025–26)

If your income-tax refund is unusually high compared to TDS, this email is not a notice — it is a signal.

Over the past few weeks, a large number of taxpayers have received emails from the Income-tax Department stating that their AY 2025–26 Income-tax Return has been kept on hold because a significant portion of TDS has been claimed as refund.

The email is polite, advisory in tone, yet firm in message.
It has raised a common concern among taxpayers:

“Is my refund blocked? Is scrutiny coming? Do I need to revise my return?”

This post answers all such questions clearly and decisively.

First and Most Important: This Email Is NOT a Notice

Let us remove the biggest fear upfront.

The communication sent to high refund claimants:

• Is not a notice under section 143(2)

• Is not a query under section 142(1)

• Does not initiate scrutiny, penalty, or prosecution

• Does not mandate any immediate reply

The Department itself clarifies that:

“This communication is intended to alert you… It is not a Notice.”

It is an automated advisory alert issued under the Risk Management Framework before processing the refund.

Why Are High Refund Claims Being Flagged?

The stated reason in the email is:

“A significant proportion of TDS deducted on Gross Total Income has been claimed as refund.”

In simple terms, your case is flagged because:

• TDS deducted is comparatively high, while

• Final tax payable after deductions/exemptions is low or nil

This situation commonly arises in perfectly genuine cases, such as:

• Excess TDS deducted by employer

• High TDS on FD or NRO interest

• Salary income with deductions not reflected in Form 16

• Capital gains with loss set-off

• Tax regime mismatch between employer and taxpayer

A high refund does not mean a wrong return.
It only means the system wants to verify before releasing money.

The Sentence That Matters — and Its True Meaning

The email contains a crucial line:

“If you don’t act now, it may be construed as a deliberate choice. That may mean your case may be selected for detailed investigation.”

This is not a threat.
It is a clear allocation of responsibility.

The Department is effectively saying:

• Review your return now

• Correct any mistake voluntarily

• If you choose not to revise, be prepared to substantiate later

This is the last non-adversarial stage before the case may move from processing to assessment.

Why Even Fully Compliant Taxpayers Receive These Emails

From practical assessment experience, such alerts are triggered due to:

• Very high refund percentage vis-à-vis total TDS

• Mismatch between ITR and:

  • Form 16

  • Form 26AS

  • AIS / TIS

• Large deductions not mirrored in employer data

• Pattern-based or clustered high-refund claims

Importantly, many accurate and compliant returns are flagged simply because they are unusual, not incorrect.

What High Refund Claimants Should Do Now

Step 1: Re-check the Return Carefully

Reconcile:

• Income reported vs Form 16 / AIS

• TDS claimed vs Form 26AS and AIS

• Deductions claimed vs actual proofs

• Correct tax regime selection

Pay special attention where refund arises due to:

• Loss set-off

• Large Chapter VI-A deductions

• High TDS on interest income

Step 2: If Any Error Is Found — Revise the Return

If you identify:

• Excess TDS claimed

• Incorrect deduction

• Wrong income reporting

• Regime mismatch

 File a Revised Return under section 139(5).

Last date for AY 2025–26: 31 December 2025

A revised return replaces the original return completely and significantly reduces scrutiny risk.

Step 3: If the Return Is Fully Correct — You May Wait, But Be Prepared

If:

• Income is fully disclosed

• TDS credits are accurate

• Deductions are genuine and documented

Then:

• Revision is not compulsory

• Refund may still be released after internal verification (though with possible delay)

However:

• Keep all documents ready

• Preserve reconciliation workings

• Respond to AIS mismatches, if any

Preparedness today prevents prolonged litigation tomorrow.

What Happens If You Miss 31 December 2025?

From 1 January 2026, correction is possible only through an Updated Return (ITR-U):

• Can only increase tax liability

• Refund enhancement is not allowed

• Additional tax of 25% or 50% applies

Hence, revising before 31 December is always safer and cheaper.

Key Takeaways for High Refund Claimants

• This email is not punitive

• It is a preventive alert

• It offers a final self-correction window

• High refund years attract closer system attention

• Timely review and documentation are the best defense

If you are a high refund claimant, this email is not a problem — it is an opportunity.

An opportunity to:

• Review calmly

• Correct voluntarily if needed

• Protect your refund

• Avoid unnecessary scrutiny

Revise if wrong.
Wait if right.
But decide before 31 December 2025.