Wrong tax claim? Govt’s ‘NUDGE’ campaign offers a second chance

New Delhi: The Union government has launched a data-driven compliance initiative called the NUDGE campaign for the Assessment Year 2025–26, aimed at encouraging taxpayers to voluntarily review and correct errors in their income tax returns.

According to a release issued by the Central Board of Direct Taxes (CBDT), the initiative focuses on deduction and exemption claims that appear potentially ineligible based on risk analytics. The outreach is advisory in nature and is intended to enable voluntary corrections rather than initiate enforcement action.

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The government said the campaign reflects a trust-first approach to tax administration, leveraging advanced data analytics and a risk management framework to identify select cases for the current assessment year. These digital tools flag instances where taxpayers may have claimed ineligible refunds or understated income.

Examples cited include claims involving bogus donations to Registered Unrecognised Political Parties (RUPPs) and other deductions where discrepancies have been found. In several cases, the tax department identified incorrect or invalid PAN details of donees, as well as mismatches in the amount of deductions claimed.

Under the initiative, the Income Tax Department sends targeted messages and emails to identified taxpayers as part of the “Non-intrusive Usage of Data to Guide and Enable” (NUDGE) campaign. This allows individuals to verify their claims and make corrections before the deadline of December 31, 2025, for filing revised returns.

The CBDT said the approach is designed to promote transparency and voluntary compliance by offering guidance instead of immediate penalties, allowing taxpayers to regularise errors using technology-driven interventions.

Data shared by the department shows increasing uptake of voluntary correction mechanisms. During the 2025–26 financial year, over 21 lakh taxpayers updated returns for previous years and paid more than Rs 2,500 crore in taxes. In addition, more than 15 lakh returns for the current assessment year have already been revised.

Taxpayers have been advised to verify their claims and revise returns, if required, to avoid further scrutiny. Those who have made genuine and legally valid claims do not need to take any action.