The Central Board of Direct Taxes (CBDT) has launched an initiative to encourage taxpayers to voluntarily review ineligible claims for deductions and exemptions in their income tax returns (ITRs) for assessment year (AY) 2025-26, an official statement said on Tuesday. The CBDT has initiated the Non-intrusive Usage of Data to Guide and Enable (NUDGE) campaign requesting taxpayers to correct such errors, in view of the due date for filing revised ITRs by December 31.
“It has been observed that certain taxpayers have claimed ineligible refunds by availing deductions or exemptions to which they are not entitled, resulting in understatement of income,” the CBDT said in a statement.
The Income Tax Department has identified cases under the risk management framework and through the use of advanced data analytics framework.
CBDT’s statement
“The framework includes instances where bogus donations to Registered Unrecognised Political Parties (RUPPs) and other ineligible deductions or exemptions appear to have been claimed in the Income-tax Returns (ITRs). It has also been observed that, in some cases, either incorrect PANs or invalid PANs of donees have been quoted. Some cases also contain errors relating to the extent of deduction or exemption claimed,” the CBDT said.
The initiative reflects a trust-first approach to tax administration, under which taxpayers are provided an opportunity to review their ITRs and voluntarily correct any ineligible claims, wherever required, the direct taxes body said.
During FY 2025-26, more than 21 lakh taxpayers have already updated their ITRs for AYs 2021-22 to 2024-25 and paid more than Rs 2,500 crore in taxes. In addition, more than 15 lakh ITRs have already been revised for the current assessment year, i.e., AY 2025-26, the CBDT said.
Advisory issued to taxpayers
It has advised the concerned taxpayers to review their ITRs, verify the correctness of their deduction and exemption claims, and revise their returns, if required, within the prescribed time to avoid further enquiries in the matter. The CBDT, however, clarified that the taxpayers whose deduction or exemption claims are genuine and correctly made in accordance with law are not required to take any further action.
“It is clarified that taxpayers who do not avail of this opportunity may still file an updated return from January 1 2026, as permitted under law, subject to payment of additional tax liability,” the statement reads.