India’s finance ministry is set to launch Project Insight 2.0 on January 27, 2028, aiming to reduce income tax refund delays by leveraging AI and predictive analytics, as processing times for refunds have unexpectedly increased amid system strains.
India’s finance ministry is preparing to switch on Project Insight 2.0 on January 27, 2028, in a move that it says could sharply reduce the wait for income tax refunds by separating routine filings from those that appear suspicious. The initiative comes as refund processing has slowed, with the average delay rising to 35 days in FY26, as of January 31, 2026, from 24 days in FY24, according to figures cited by The Hindu BusinessLine.
The strain is also visible in the volume of older cases. The number of refunds issued after more than 90 days climbed to about 27 lakh in FY26, from roughly 12.73 lakh in FY24, while the total number of refunds in FY26, as of January 31, stood at more than 3.38 crore, only slightly below the around 3.41 crore recorded for the full FY24. The income tax department’s citizen charter says refunds should generally be issued within three months of the order or application being received.
In its submission to a parliamentary panel, the ministry said some delays are caused by routine security checks, including unvalidated bank accounts, an unlinked PAN and Aadhaar, and adjustments against outstanding demands. It said a second set of delays stems from system-flagged risks, including high-risk returns, prima facie adjustments, variance checks and suspected bogus claims for deductions or exemptions. The ministry argued that many of these problems should ease once Project Insight 2.0 is fully operational.
According to the ministry’s plan, the upgraded system will use artificial intelligence-based risk scoring, predictive models and dynamic learning tools to identify potentially fraudulent refund claims and distinguish them from low-risk filings. The e-filing portal showed that for assessment year 2026-27, more than 6.34 crore returns had been filed by August 15, with over 4.59 crore already processed. Even so, refund growth has remained modest: between April 1 and August 10, refunds worth more than ₹1.43 lakh crore were issued, only 4% higher than the roughly ₹1.38 lakh crore disbursed in the same period a year earlier.
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