Income Tax NUDGE Campaign Flags Ineligible Claims for AY 2025-26

The Income Tax Department has launched a data-driven NUDGE campaign for Assessment Year 2025-26, urging taxpayers to voluntarily review and correct deduction and exemption claims identified as potentially ineligible. The initiative reflects a trust-based, non-intrusive compliance approach, ahead of the December 31 deadline for filing revised Income Tax Returns (ITRs).

Data Analytics Drive Targeted Outreach

Under the “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” framework, the Income Tax Department is using advanced risk analytics to identify discrepancies in filed returns. Selected taxpayers are being informed through SMS and email advisories, encouraging them to verify and, if required, revise their claims voluntarily.

Nature of Discrepancies Identified

According to the department, the analytics-based risk management framework has flagged cases involving claims of bogus donations to Registered Unrecognised Political Parties, as well as other ineligible deductions or exemptions. In several instances, incorrect or invalid Permanent Account Numbers (PANs) of donees have been quoted. Errors have also been observed in the quantum of deductions or exemptions claimed, prompting advisory outreach rather than enforcement action.

Trust-First and Non-Intrusive Compliance Model

The department clarified that the NUDGE outreach is purely advisory in nature and not coercive. The campaign is designed to promote transparency, voluntary compliance and taxpayer convenience by enabling self-correction before statutory deadlines. By leveraging technology and data analytics, the initiative seeks to reduce litigation and foster a cooperative tax administration environment.

Imporatnt Facts for Exams

• NUDGE stands for Non-intrusive Usage of Data to Guide and Enable.
• The campaign targets Assessment Year 2025-26.
• It focuses on voluntary correction of ineligible deductions.
• Risk analytics and data matching underpin the initiative.

Compliance Trends and Taxpayer Response

The Income Tax Department noted strong taxpayer participation in voluntary compliance. During 2025-26, over 21 lakh taxpayers updated their ITRs for Assessment Years 2021-22 to 2024-25, resulting in additional tax payments exceeding ₹2,500 crore. For the current Assessment Year 2025-26 alone, more than 15 lakh revised returns have already been filed, indicating growing acceptance of data-driven, guidance-based compliance mechanisms.