ITR Filing 2025: Got an Extra Income Tax Refund? Don’t Celebrate or Spend It — You Could End Up in Jail

The deadline for filing income tax returns (ITR) has been extended till 15th September. People who will file their ITRs before this date will receive quick refund credits. As the filing process begins in July every year, some taxpayers have received their refunds, while others are still waiting. There is a possibility of one receiving an extra amount in their refund. However, if you’ve accidentally received a higher-than-expected refund in your bank account, do not make the mistake of spending it in excitement. If you spend that extra amount, you will face legal consequences.

Like every year, this year too, several individuals have received more refunds than expected. If this has happened to you or someone you know, do not celebrate — instead, immediately inform the Income Tax Department. Failing to do so may result in you receiving a notice.

How does this over-refund happen in the first place?
In recent years, the income tax filing process has become much faster and more efficient. Taxpayers now receive their refunds within a few days. However, this efficiency can sometimes cause issues. If a taxpayer makes a mistake while filing and the department processes the return before the correction is made, the refund amount may be wrongly calculated. This leaves no room for the taxpayer to rectify the error beforehand. In such situations, an excess refund gets credited because while the taxpayer takes time to correct the mistake in the ITR, the department processes it rapidly. If this happens to you or someone you know, do not ignore or keep the extra refund, or the Income Tax Department can initiate action against you.

What To Do If You’ve Received an Excess ITR Refund?
If you notice that a higher refund has been credited to your account, the first step is to file a Revised ITR. This revised return should reflect the correct income, deductions, and bank details. Then, use Challan 280 to return the excess amount to the government. Additionally, notify the Income Tax Department by email or letter about the accidental excess credit.

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How to File a Revised ITR:

1. Visit the Income Tax e-filing portal.
2. Log in using your PAN, password, and captcha code.
3. Go to Main Menu > e-File > Income Tax Return.
4. Select the relevant Assessment Year and choose ‘Revised Return’.
5. Under ‘Filing Type’, select Section 139(5) (Revised Return).
6. Enter the acknowledgment number and filing date of the original ITR.
7. Correct any wrong details such as income, deductions, or bank information.
8. Submit and e-verify the revised ITR.

Important Legal Warning for Taxpayers:
If you knowingly spend or retain the excess refund received, a case can be filed under Section 406 of the IPC (Indian Penal Code) for criminal breach of trust. This could result in up to three years of imprisonment, a fine, or both. The government also has the authority to initiate legal action to recover the extra amount.