CBDT urges taxpayers to correct ineligible tax deductions by December 31

CBDT is reaching out via SMS and email under its NUDGE campaign, urging identified taxpayers to review potentially ineligible deductions for AY 2025-26 and revise returns by December 31, 2025

Thousands of taxpayers have received text messages from the income tax (I-T) department asking them to file revised returns by December 31, claiming discrepancies were identified in their refund claims.

 

“Processing of the said return was held as it was identified under risk management process on account of certain discrepancies in the claim of refund. An email with details has also been sent to your registered email address,” read one such message sent to taxpayers.

 

Many recipients took to social media to say they had not received any follow-up email and complained that legitimate refunds were being held up. “The income tax department took 4+ months to identify the issue. And now gives taxpayers barely a few days to fix it,” one user posted on X.

 

 

Later, the Central Board of Direct Taxes (CBDT) said the outreach was part of its “Non-Intrusive Usage of Data to Guide and Enable (NUDGE)” campaign, which aims to prompt voluntary compliance by flagging potential errors identified through risk analytics. “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.

 

According to the I-T department, the discrepancies include bogus donations to registered unrecognised political parties (RUPPs) and other ineligible deductions or exemptions. Officials also pointed to cases involving incorrect or invalid permanent account numbers (PANs) of donees, as well as errors in the amount of deductions or exemptions claimed. “This initiative reflects a trust-first approach to tax administration, under which taxpayers are provided an opportunity to review their income tax returns (ITRs) and voluntarily correct any ineligible claims, wherever required,” the CBDT said.

 

The board clarified that taxpayers whose deductions or exemption claims are genuine and correctly made in accordance with the law do not need to take any further action.

 

Taxpayers who do not avail themselves of the current opportunity may still file an updated return from January 1 onwards, as permitted under the law, subject to payment of additional tax liability, the CBDT said.

 

In 2025-26 so far, more than 2.1 million taxpayers have already updated their ITRs for assessment years 2021-22 to 2024-25, paying over ₹2,500 crore in additional taxes. In addition, more than 1.5 million returns have already been revised for the current assessment year, 2025-26.

 

The push comes against the backdrop of slower refund processing this financial year. Income tax refunds fell by 13.5 per cent during the period from April 1 to December 17. The sharpest decline, of 24.2 per cent, was seen in non-corporate taxes, which include personal income tax, while corporate tax refunds dipped by 4.4 per cent over the same period.

 

A senior CBDT official said the messages should not be viewed as punitive. “It’s a positive approach by the government. These are just reminders by the CBDT to taxpayers to revise their returns as they still have time until December 31. If taxpayers think that they have not committed any error, they need not panic as these are not notices,” the official said.

 

Abhishek A Rastogi, founder of Rastogi Chambers, said the widespread alerts reflected the increased use of data analytics by tax authorities. “With increased use of data analytics, a large number of deduction mismatches are being flagged simultaneously. Extending the revised return deadline to January 31 would ease compliance pressure and reduce avoidable disputes arising from rushed revisions,” he said.

 

Chetan Daga, a partner at AdvantEdge Consulting Group, said the outreach was intended to flag non-genuine or excessive deduction claims, while leaving genuine cases untouched. He added that employers already verify documents before allowing deductions for tax deducted at source (TDS) purposes.

 

The current exercise marks the latest phase of the CBDT’s NUDGE programme. The campaign began in November 2024 with a focus on undisclosed foreign assets and income, prompting more than 24,000 taxpayers to revise their returns and disclose assets worth about ₹29,000 crore by early 2025. A subsequent nudge in November 2025 again targeted foreign holdings, followed by another in early December 2025 focusing on bogus donation claims.