The Income Tax Department in India has accelerated its processing of Income Tax Returns (ITRs), with nearly 60% of the more than 3.2 crore returns filed so far this assessment year already processed. This marks a significant improvement, particularly as it's the first filing season operating under the new Income Tax Act, 2025.
Union Finance Minister Nirmala Sitharaman, speaking at the 167th Income Tax Day celebrations, highlighted the progress. As of July 21, over 3.2 crore ITRs had been submitted, with approximately 94% verified and around 60% processed. She emphasized that faster processing and prompt refunds build taxpayer confidence and enhance liquidity for both individuals and businesses.
Refund Processing and Digital Enhancements
Refund claims have also seen notable progress. Taxpayers have filed over 1.3 crore refund claims this season, of which 96% have been verified and about 40% already processed. The Finance Minister urged the department to further reduce refund processing timelines.
These improvements are largely attributed to substantial upgrades in the Income Tax Department's digital infrastructure. The e-Filing portal has been bolstered with increased computing capacity, storage, bandwidth, and network infrastructure to manage the surge in filings. This has enabled the portal to handle over one crore taxpayer interactions daily, with peak interactions reaching around 1.6 crore.
New Tax Act and Future Reforms
The current filing season is the first since the implementation of the Income Tax Act, 2025, which aims to simplify tax laws, reduce uncertainty, and lower compliance costs. Sitharaman noted that the department's role has evolved beyond mere tax collection to focus on fairness, efficiency, ease of doing business, and superior taxpayer services.
Grievance redressal mechanisms have also shown significant improvement. In FY 2025-26, the department resolved 94% of nearly 78,000 grievances via the Centralised Public Grievance Redress and Monitoring System (CPGRAMS), reducing the average disposal time from 57 to 28 days. Similarly, the e-Nivaran platform resolved 95% of approximately 3.5 lakh grievances, with average disposal time dropping to 42 days.
Looking ahead, the Finance Minister called for continued reforms, urging the department to embrace the "5Rs of Responsive Tax Governance": Recognise, Respond, Redress, Reflect, and Reform. The long-term objective, she stated, is to shift from "litigation management" to "litigation prevention" through greater tax certainty, consistent law interpretation, and timely guidance for taxpayers.