In a significant move to ease taxpayer burdens, the Central Board of Direct Taxes (CBDT) has introduced a relaxation for processing conditionally accepted ITRs under Section 119(2)(b) of the Income Tax Act. Announced via Circular No. 07/2025 dated June 25, 2025, this provision addresses long-standing issues faced by individuals who filed delayed Income Tax Returns (ITRs) due to valid reasons like illness, technical glitches, or court orders. If you’re among the many taxpayers awaiting refunds or facing processing delays, this CBDT conditionally accepted ITRs relaxation could be the game-changer you’ve been waiting for.
This article dives deep into the nuances of this relaxation, eligibility, timelines, and practical steps to ensure you benefit from it. Whether you’re a salaried professional, freelancer, or business owner, understanding these updates is crucial for compliance and financial planning in Assessment Year (AY) 2025-26.
CBDT Conditionally Accepted ITRs Relaxation
The core of this relaxation lies in overriding the strict timelines under Section 143(1) for processing ITRs. Normally, the Income Tax Department must process returns and issue intimation within one year from the end of the assessment year. However, for delayed filings condoned under Section 119(2)(b), this deadline often lapsed, leaving taxpayers in limbo—especially regarding refunds.
Under the new circular, CBDT has invoked its powers under Section 119 to extend processing for valid, electronically filed ITRs submitted up to March 31, 2024, even if the standard time limit has expired. This applies specifically to returns where the delay was condoned by the competent authority, ensuring that technical or procedural hurdles don’t penalize honest filers.
Key highlights include:
- Targeted Relief: Focuses on “conditionally accepted” ITRs, meaning those approved post-condonation but stuck due to expired processing windows.
- No Retrospective Assessments: The relaxation doesn’t apply if an assessment, reassessment, or income revision has already been completed for the relevant AY.
This step reflects CBDT’s ongoing efforts to modernize tax administration and reduce litigation, particularly amid rising e-filing volumes.
Who is Eligible for This Relaxation?
Not every delayed ITR qualifies—eligibility is tightly defined to prevent misuse. Here’s a breakdown:
| Eligibility Criteria | Details |
|---|---|
| Filing Mode | Must be electronically filed via the e-filing portal. Paper returns are excluded. |
| Condonation Approval | Delay must be explicitly condoned under Section 119(2)(b) by the Principal Commissioner or higher authority. Common reasons: Serious illness, natural calamities, or genuine hardships. |
| Filing Cutoff | ITRs filed on or before March 31, 2024. |
| Validity Check | The return must be “valid” per ITR utilities—no defects like mismatched PAN or incomplete schedules. |
| No Prior Completion | No assessment u/s 143(3), reassessment u/s 147, or revision u/s 263/264 done for that AY. |
For instance, if you filed a belated ITR for AY 2020-21 in February 2024 after condonation for medical reasons, and it remains unprocessed, you’re likely eligible. Taxpayers from AY 2018-19 to AY 2022-23 have reported the most benefits, as these were hit hardest by pandemic-related delays.
Pro Tip: Verify your condonation status in the e-filing portal under “My Requests” to confirm eligibility before expecting action.
Timelines and Processing Deadlines Under the Relaxation
One of the most taxpayer-friendly aspects is the extended window for the department to act. Here’s the updated timeline:
- Original Deadline (Pre-Relaxation): Intimation u/s 143(1) within 9-12 months from the end of the AY, depending on the year.
- New Extended Deadline: All eligible intimation must remain sent by March 31, 2026. This gives the department nearly a year from the circular’s issuance to clear backlogs.
| Assessment Year | Original Processing Limit | Relaxed Limit |
|---|---|---|
| AY 2018-19 | Expired (March 31, 2020) | March 31, 2026 |
| AY 2019-20 | Expired (March 31, 2021) | March 31, 2026 |
| AY 2020-21 | Expired (March 31, 2022) | March 31, 2026 |
| AY 2021-22 | Expired (March 31, 2023) | March 31, 2026 |
| AY 2022-23 | Ongoing/Expired | March 31, 2026 |
Refunds, if due, will remain credited post-intimation, with interest u/s 244A at 0.5% per month from the date of filing. Expect processing to ramp up in Q4 2025. As the department addresses technical glitches reported in earlier systems.
Note: While the filing due date for AY 2025-26 was extended to September 15, 2025, this relaxation is retrospective and doesn’t impact current filings.
Benefits and Implications for Taxpayers
This CBDT conditionally accepted ITRs relaxation isn’t just bureaucratic fine-tuning—it’s real relief with tangible outcomes:
- Faster Refunds: Thousands of pending claims, especially from the COVID era, can now remain processed. Early filers under condonation may see credits by late 2025.
- Reduced Litigation: Avoids appeals to ITAT or courts over unprocessed returns, saving time and costs.
- Compliance Boost: Encourages accurate belated filings without fear of perpetual delays, aligning with CBDT’s Faceless Assessment scheme.
- Interest on Refunds: Automatic accrual ensures no loss due to departmental delays.
For businesses, this means better cash flow management; for individuals, it’s peace of mind amid rising living costs. However, taxpayers should monitor for any scrutiny notices post-processing, as condoned delays can still trigger verifications.
How to Track Your ITR Processing Status
Wondering if your return is in the queue? Follow these steps:
- Log in to the Income Tax e-filing portal (incometax.gov.in).
- Go to “e-File” > “Income Tax Returns” > “View Filed Returns.”
- Select the relevant AY and check the “Processing Status.”
- If unprocessed, raise a grievance under “Grievances” > “Submit Grievance,” referencing Circular 07/2025.
For refunds, use the “Refund Status” tab. If issues persist, consult a CA for a condonation re-application if needed.
Frequently Asked Questions
1. What exactly is a “conditionally accepted ITR”?
It’s an ITR filed after the due date but approved under condonation u/s 119(2)(b), subject to processing relaxation.
2. Does this relaxation apply to AY 2025-26?
No, it remain limited to returns filed up to March 31, 2024, covering earlier AYs.
3. Will I get interest on delayed refunds?
Yes, at 0.5% per month from filing date, as per Section 244A.
4. What if my ITR was filed after March 31, 2024?
Seek fresh condonation and file; processing follows standard timelines unless further relaxed.
5. Can I expect processing before March 2026?
Yes, prioritized cases (e.g., high-value refunds) may remain handled sooner—check status regularly.
This CBDT initiative underscores a shift toward taxpayer-centric reforms. Stay updated via official channels, and if eligible, breathe easy knowing your delayed ITR won’t be a permanent roadblock. For personalized advice, reach out to a tax professional.