CBDT Encourages Taxpayers to Review and Correct Ineligible Deduction/Exemption Claims

Press Release, dated 23-12-2025

1. Background

The Central Board of Direct Taxes (CBDT) has identified a set of cases for Assessment Year (AY) 2025–26 where taxpayers appear to have claimed ineligible refunds by availing deductions or exemptions to which they are not entitled.

The initiative forms part of CBDT’s Non-intrusive Usage of Data to Guide and Enable (NUDGE) campaign, which emphasises voluntary compliance through data-driven guidance rather than immediate enforcement.

2. Nature of Issues Identified

Based on data analytics and risk assessment, CBDT has flagged instances involving:

• Bogus or doubtful donations claimed as deductions, including donations to Registered Unrecognised Political Parties (RUPPs)
• Other ineligible deductions or exemptions claimed in Income-tax Returns (ITRs)
• Quotation of incorrect or invalid PANs of donees
• Errors in quantum of deduction or exemption claimed

These discrepancies have resulted in ineligible refund claims for the relevant assessment year.

3. NUDGE Campaign – Taxpayer-Friendly Outreach

CBDT has initiated targeted outreach to affected taxpayers through:

• SMS alerts, and
• Email advisories sent to registered contact details

The communication encourages taxpayers to review their ITRs and voluntarily correct errors, if any.

4. Opportunity to Revise Returns

Taxpayers have been provided a clear window to regularise their filings:

• Last date to file a revised return for AY 2025–26 – 31 December 2025

Taxpayers are advised to:

• Re-examine deduction and exemption claims
• Verify the genuineness of donee entities and correctness of PAN details
• Revise the return where any claim is found to be incorrect or ineligible

Timely revision can help avoid further enquiries, scrutiny, or follow-up action.

5. What Happens After 31 December 2025

• Taxpayers who miss the revision window may still file an updated return
• Updated returns can be filed from 1 January 2026, but they will be subject to additional tax as prescribed under the Act

6. No Action Needed for Correct Claims

CBDT has clarified that:

• Taxpayers whose claims are correct and lawful need not take any action
• The NUDGE communications are advisory and targeted only at cases with identified risk indicators

7. Progress and Impact of the NUDGE Approach

CBDT highlighted encouraging compliance outcomes under the NUDGE framework:

• Over 21 lakh taxpayers updated their ITRs for AYs 2021–22 to 2024–25
• More than ₹2,500 crore paid through voluntary updates
• Over 15 lakh returns already revised for AY 2025–26

This demonstrates strong taxpayer participation and the effectiveness of non-intrusive, guidance-based compliance measures.

8. Regulatory Intent

The initiative seeks to:

• Promote voluntary and timely compliance
• Reduce disputes, litigation, and enforcement burden
• Use advanced data analytics for early risk identification
• Encourage taxpayers to self-correct without fear of immediate penal action

9. Key Takeaways for Taxpayers

• Review ITRs for AY 2025–26 if you receive an SMS/email from CBDT
• Verify all deduction and exemption claims, especially donation-related claims
• File a revised return by 31 December 2025, if required
• Maintain correct PAN and documentation for all donees
• Missing the revision window may lead to higher tax cost under the updated return route

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