Refund Status Showing Failure: How to Fix Bank Account Issues
- Nimisha Panda
- 7 days ago
- 8 min read
Refund status showing failure usually indicates that the Income Tax Department could not credit the refund because the bank account details in the return do not match PAN records, lack pre-validation, or belong to an inactive or closed account. Refund failure is primarily a banking information mismatch issue, not an error in the ITR itself. Correcting the bank details, validating the account, and initiating a refund reissue request typically resolves the problem. With stricter processing checks in 2025 and increased scrutiny of refund claims, accurate and validated bank details have become essential for smooth refund credits.
Table of Contents
Why Income Tax Refund Status Shows Failure
Refund failure occurs when the Income Tax Department attempts to credit the refund but the bank rejects the transaction. The department relies entirely on the bank details stored in the e-filing portal, and even a minor mismatch—whether in name spelling, IFSC, or account number—results in a failed credit attempt. The system automatically marks the refund as “Failure” once the bank reports that the beneficiary account could not be validated or credited. With tighter scrutiny in recent years, the department validates PAN, account activity, and nomination status before releasing refunds, making accurate banking details essential for smooth processing.
Common Bank Account Issues Causing Refund Failure
Refunds typically fail due to discrepancies within the banking ecosystem. Incorrect account numbers or outdated IFSC codes often lead to rejections because the account cannot be identified by the bank. Name mismatch between PAN and the bank account blocks the refund at the verification stage. Closed or dormant accounts fail automatically since banks do not accept credits to inactive accounts. Another common cause is missing pre-validation, which is mandatory for refunds. Even technical issues—server downtime, validation delays, or routing errors—can temporarily interrupt refund credit attempts.
How to Fix Bank Account Issues for Refund Recredit
Fixing refund failure begins with verifying the entered bank details thoroughly. The account number must match exactly, and the IFSC should belong to the correct branch. If the name on the bank account differs from the PAN, either the PAN records or bank records should be updated to match. Once accurate information is available, the corrected details must be updated immediately on the e-filing portal. Filing a revised ITR is optional, but updating the bank section and ensuring validation is essential. After that, the taxpayer needs to raise a refund reissue request so the corrected details can be used to attempt the credit again.
How to Pre-Validate a Bank Account for Refunds
Pre-validation confirms that the bank account belongs to the PAN holder and is capable of receiving refunds. The process is completed through the e-filing portal under the “My Bank Account” tab. After entering account details, the system triggers verification through the bank—usually via OTP on the registered mobile number or internet banking authentication. Pre-validation ensures the account is active, correctly linked to PAN, and technically enabled to receive income tax refunds. Only validated accounts appear eligible for nomination, making this step essential before refund processing begins.
How to File a Refund Reissue Request on the Portal
A refund reissue request is needed after correcting bank details. The user logs into the e-filing portal, navigates to “Refund Reissue” under the Services menu, and selects the updated, validated bank account. The system generates a request number that can be used for future tracking. The department then resends the refund credit instruction to the updated bank details. This step is crucial because the department does not automatically retry crediting after a failure unless a reissue request is filed.
Choosing and Nominating the Correct Bank Account for Refund
Only one primary account can receive the refund. Even though multiple accounts can be pre-validated, the taxpayer must nominate the preferred account for refund credit. Nomination activates the refund-receiving capability for that account. The nominated account should ideally be active, frequently used, and linked to a mobile number and internet banking credentials to avoid verification hurdles. When details are updated or accounts are switched, nomination must also be refreshed on the portal.
Active Account Requirements and OTP Verification Issues
Refunds can only be credited to active accounts. Dormant or inoperative accounts are automatically rejected by banks. During pre-validation, OTP verification is often necessary, so the mobile number in the bank’s records must be updated. If OTP does not arrive, it usually indicates that the mobile number is not linked, or the account does not support SMS-based verification. Some banks require internet banking to be enabled before pre-validation works smoothly. Ensuring updated contact details helps prevent validation failures and refund delays.
Why Refund Delays Increased in 2025
Refund delays became more common in 2025 due to increased scrutiny of flagged returns. High-value refunds, returns with mismatches, or transactions involving capital gains and foreign assets underwent additional verification. The Central Board of Direct Taxes also slowed release of refunds linked to inconsistent AIS/TIS data. With systemic checks rising and TDS rationalisation reducing refund volumes, the department prioritised error-free and low-risk returns. Approved refunds were expected to settle by late 2025 for most taxpayers, while cases under verification experienced longer waiting periods.
Refund Status Still Showing Failure? What to Do Next
When refund failure persists after updating details, the next steps include ensuring the name on PAN and the bank account matches exactly, checking if the IFSC belongs to a merged branch, and confirming the account is not set to dormant status. Contacting the bank for validation issues often uncovers routing or KYC-related mismatches. The taxpayer may also file a grievance on the e-filing portal under “e-Nivaran” for the department to manually review the failure reason. At this stage, platforms like TaxBuddy help identify hidden mismatches, guide corrections, and ensure the refund reissue request is filed correctly.
Role of TaxBuddy in Resolving Refund-Related Issues
TaxBuddy simplifies the process of resolving refund failures by guiding users through bank detail correction, pre-validation, and refund reissue steps. The platform identifies common mismatches, highlights incorrect entries, and ensures all refund-related processes follow the correct sequence. With refund processing becoming more detail-sensitive, tools like TaxBuddy help reduce errors, monitor refund status updates, and advise users on next steps when refund status continues to show failure. This reduces repeat failures and saves considerable time in resolving refund credit issues.
Conclusion
Refund failure often results from simple mismatches or inactive accounts, but resolving them requires careful updating, validation, and reissuing steps on the e-filing portal. Accurate details ensure refunds are processed without interruption. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers both modes to suit different levels of complexity. The self-filing system is powered by automated data extraction, smart pre-fill, and error detection, allowing users with straightforward income sources to complete filing quickly and confidently. The expert-assisted plan is designed for individuals dealing with multiple income streams, capital gains, rental income, business or professional earnings, or refund complications. It connects taxpayers with trained professionals who review documents, prepare the return, ensure compliance with the latest tax rules, and provide guidance for notices or refund-related issues. This flexibility allows TaxBuddy to support simple as well as complex filings effectively.
Which is the best site to file ITR?
The official Income Tax Department portal is the primary platform for filing returns, but many taxpayers prefer using intermediary platforms for a smoother experience. Platforms like TaxBuddy stand out because they automate data checks, minimise errors, and simplify form selection based on income type. They also reduce the risk of refund delays or mismatches by helping users enter correct details. This combination of convenience, automation, and expert availability makes such platforms a preferred option for accurate and stress-free filing.
Where to file an income tax return?
Income tax returns can be filed directly on the government e-filing portal for taxpayers who are comfortable navigating the process themselves. Those who prefer guided assistance can file through authorised e-return intermediaries like TaxBuddy, which integrates with the department’s systems. These platforms offer features that reduce manual data entry, check discrepancies in AIS/TIS, and streamline refund-related issues, making the entire filing journey more accessible and reliable.
Why does my refund status show failure?
Refund status shows failure when the Income Tax Department attempts to credit the refund but the bank rejects the transaction. This usually happens due to incorrect bank account numbers, outdated IFSC codes, closed or inactive accounts, or a mismatch between the name on PAN and the bank account. Refund failure also occurs when the bank account has not been pre-validated on the portal. The department cannot reattempt credit until details are corrected and a refund reissue request is filed.
How do I fix refund failure due to incorrect IFSC?
Incorrect IFSC codes must be corrected on the e-filing portal under the bank account section. The updated details must then undergo pre-validation to ensure the bank verifies the account successfully. Once the new IFSC is confirmed and the account is validated, a refund reissue request must be submitted so the department can retry the refund credit using the corrected details. This three-step sequence—update, validate, reissue—is required to resolve IFSC-related failures.
How do I update my bank details after filing ITR?
Updated bank details can be added through the “My Bank Account” section on the income tax portal. The taxpayer must enter the correct account number, IFSC, and account type, after which the system sends the information to the bank for validation. Once the account is successfully validated, the user must nominate it for receiving refunds. After this step, a refund reissue request needs to be filed so the department sends the refund to the newly added account.
What is bank account pre-validation for refunds?
Pre-validation is a mandatory verification process that confirms the bank account belongs to the PAN holder and is eligible to receive income tax refunds. During pre-validation, the bank checks the account’s activity status, KYC compliance, and PAN linkage. The process often involves OTP verification or internet banking authentication. Only validated accounts are considered eligible for refund credit or nomination, making this step essential for avoiding refund failure.
Can a refund be credited to a joint account?
A refund can be credited to a joint account if the PAN belonging to the taxpayer matches the PAN linked to the primary holder of that account. Since refunds are strictly matched to PAN-linked identity, shared accounts are acceptable as long as ownership and validation align. If the joint account is not linked correctly or the PAN does not match, pre-validation fails and the refund cannot be credited.
What if my bank account was closed after filing the ITR?
If the bank account used in the ITR has been closed, the Income Tax Department cannot credit the refund, resulting in refund failure. The solution is to add a new active bank account on the portal, complete pre-validation, and nominate it for receiving refunds. After the new account is validated, the taxpayer must file a refund reissue request so the refund can be credited to the updated account. The department does not automatically redirect refunds to new accounts.
How long does refund reissue take after bank correction?
Once the bank details are updated, validated, and nominated, the refund reissue request typically takes one to three weeks to process. Timelines depend on the department’s workload, system cycles, and whether the return has been flagged for additional scrutiny. If all details match cleanly and the account is active, the credit often happens faster. Cases involving mismatches, technical delays, or compliance verification may take slightly longer.
Why is name mismatch causing refund failure?
Refund credits require the name on the bank account to match the PAN holder’s name. If the name differs due to spelling errors, name changes after marriage, initials, or formatting variations, the bank rejects the refund credit. To fix this, either PAN details must be updated to reflect the correct name or the bank account must be corrected to match PAN records. Until this alignment is achieved, refund attempts will continue to fail.
Can TaxBuddy help resolve refund failure issues? TaxBuddy assists by identifying the exact reason for refund failure, reviewing mismatches in bank details, and guiding users through correction steps. This includes updating bank details, completing pre-validation, nominating the correct account, and filing refund reissue requests. The platform also monitors status changes and helps prevent repeat failures by ensuring all requirements are met before the reissue attempt. For taxpayers facing ongoing failures or complex compliance issues, expert-assisted guidance helps avoid delays and ensures smoother refund processing.
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