Income Tax Department Launches NUDGE Campaign for AY 2025-26

NUDGE Campaign for Trust-Based Tax Compliance

The Income Tax Department has launched a data-driven NUDGE campaign for Assessment Year (AY) 2025-26 , encouraging taxpayers to voluntarily review and correct deduction and exemption claims that may be ineligible. The initiative reflects a trust-first and non-intrusive compliance approach , ahead of the December 31 deadline for filing revised Income Tax Returns (ITRs).

Data Analytics and Targeted Advisory Outreach

Under the Non-intrusive Usage of Data to Guide and Enable (NUDGE) framework, the department is using advanced risk analytics and data matching tools to identify potential discrepancies in filed returns. Selected taxpayers are being contacted through SMS and email advisories , requesting them to verify their claims and revise returns if inaccuracies are found. The approach prioritises guidance over enforcement.

Nature of Discrepancies Flagged

The analytics-based risk management system has identified cases involving bogus donation claims to Registered Unrecognised Political Parties , along with other ineligible deductions or exemptions . In several instances, incorrect or invalid Permanent Account Numbers (PANs) of donees were quoted. Errors related to the quantum of deductions claimed have also been observed. Instead of immediate penal action, the department has opted for advisory communication to enable voluntary correction.

Non-Coercive and Technology-Enabled Model

The department clarified that the NUDGE outreach is purely advisory and not coercive. By enabling self-correction before statutory deadlines, the initiative aims to enhance transparency, reduce litigation and improve taxpayer convenience. It also reflects the department’s broader shift towards technology-driven, cooperative tax administration .

Compliance Trends and Outcomes

The response to voluntary compliance measures has been encouraging. During FY 2025-26 , over 21 lakh taxpayers updated ITRs for AYs 2021-22 to 2024-25 , resulting in additional tax payments exceeding ₹2,500 crore . For AY 2025-26 , more than 15 lakh revised returns have already been filed, indicating growing acceptance of guidance-based compliance mechanisms.

Important Facts for Exams

• NUDGE stands for Non-intrusive Usage of Data to Guide and Enable

• Campaign targets Assessment Year 2025-26

• Focuses on voluntary correction of ineligible deductions

• Driven by risk analytics and data matching