Income tax department urges taxpayers to voluntarily review invalid refund claims; sets 31 December deadline

The Central Board of Direct Taxes (CBDT) has rolled out a data-driven “nudge” campaign for the 2025–26 assessment year, urging taxpayers to voluntarily review and rectify deduction and exemption claims flagged as potentially ineligible through risk analytics. This includes cases linked to bogus donations made to Registered Unrecognised Political Parties (RUPPs).

The advisory initiative asks identified taxpayers to file revised income-tax returns (ITRs) by December 31, 2025. Those who fail to meet the deadline can still submit updated returns from January 1, 2026, though this will attract additional tax liability as allowed under the law.

“The department has launched a data-driven NUDGE campaign for AY 2025–26 encouraging taxpayers to voluntarily review deduction claims identified as potentially ineligible through risk analytics,” the CBDT said in a statement on December 23.

The tax department said it detected instances where taxpayers secured ineligible refunds by claiming deductions or exemptions they were not eligible for, leading to an understatement of income. Using its risk management framework and advanced data analytics, it identified AY26 cases involving claims such as bogus donations to RUPPs and other inadmissible deductions or exemptions.

The CBDT further pointed to cases where incorrect or invalid Permanent Account Numbers (PANs) were provided, along with discrepancies in the amount or nature of deductions or exemptions claimed.

Is CBDT’s “NUDGE” campaign tightening refund scrutiny?

Identified taxpayers are being reached out to via SMS and email under the “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” campaign, encouraging them to rectify such discrepancies ahead of the December 31 deadline for filing revised returns.

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

The latest nudge comes at a time when refund outflows have slowed noticeably. Income-tax refunds totalled ₹2.97 lakh crore between April 1 and December 17, marking a 13.52 per cent decline compared with the same period in the previous financial year, according to official data.