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Income Tax Alert: CBDT’s NUDGE Campaign on Wrong Deductions & Exemptions (AY 2025-26)

Government of India | Ministry of Finance | CBDT
Press Release dated 23 December 2025

The Central Board of Direct Taxes (CBDT) has issued an important press release urging taxpayers to voluntarily review and correct wrong deductions or exemptions claimed in Income Tax Returns (ITRs) for Assessment Year 2025-26.

This initiative is part of the “NUDGE” Campaign – Non-intrusive Usage of Data to Guide and Enable, aimed at improving voluntary compliance without harassment.

🔍 What Triggered This CBDT Action?

CBDT, through advanced data analytics and risk management systems, has identified cases where taxpayers have:

• Claimed ineligible deductions or exemptions
• Shown bogus donations, especially to:
  • Registered Unrecognised Political Parties (RUPPs)
• Quoted incorrect or invalid PANs of donees
• Claimed excess deductions beyond permissible limits
• Incorrectly reported exemption amounts in ITRs

Such incorrect claims result in understatement of income, which attracts scrutiny.

📩 How Will Taxpayers Be Informed?

Identified taxpayers are being contacted via:

• SMS
• Email

These communications request taxpayers to:

• Review their filed ITR
• Correct mistakes voluntarily, if any

⚠️ Important:
This is not a notice under the Income Tax Act.
It is a pre-emptive compliance opportunity.

⏰ Last Date to Take Action

👉 31 December 2025

Taxpayers can:

• File a Revised Return
• Or an Updated Return, wherever applicable

Doing this before 31 December 2025 helps avoid:

• Further scrutiny
• Notices
• Penalty proceedings

📊 CBDT Data: Strong Response So Far

CBDT has shared impressive compliance figures:

• More than 21 lakh taxpayers have already:
  • Updated ITRs for AYs 2021-22 to 2024-25
  • Paid over ₹2,500 crore in taxes
• For AY 2025-26 alone, over 15 lakh revised ITRs have already been filed

This shows that voluntary correction works better than enforcement.

✅ What Should Taxpayers Do Now?

Step-by-step Guidance:

1. Re-check your ITR, especially:
   • Chapter VI-A deductions (80C, 80G, etc.)
   • Exempt income claims
2. Verify:
   • Donation receipts
   • PAN of donee
   • Eligibility of exemption
3. If any error is found:
   • File Revised / Updated Return
4. If claims are genuine and correct:
   • No action required

❌ Who Need NOT Worry?

CBDT has clearly stated:

Taxpayers whose deductions or exemptions are genuine and correctly claimed do not need to take any further action.

So honest taxpayers are fully protected.

📅 What If You Ignore This Opportunity?

If you do not act now:

• You may still file an Updated Return from 1 January 2026
• But:
  • Additional tax liability will apply
  • Risk of future enquiries increases

🧠 Key Takeaway for Taxpayers

This initiative reflects:

• A trust-first approach
• Focus on voluntary compliance
• Use of technology instead of harassment

👉 Correct today, relax tomorrow.

🎯 CA Guruji’s Professional Advice

✔ Don’t panic on receiving SMS or email
✔ Treat this as a chance, not a threat
✔ Review your ITR calmly with documents
✔ Correct mistakes before 31 December 2025
✔ Avoid unnecessary notices in future

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