As the December 31, 2025 deadline for filing belated or updated income tax returns approaches, many taxpayers are receiving emails and SMS alerts from the Income Tax Department asking them to review their exemption and deduction claims. These communications have triggered concern among filers, especially as refunds for several returns are still pending.

The tax department has clarified that these alerts are part of its ongoing compliance initiative and not a cause for panic.

Extended deadline, but scrutiny continues

For FY 2024–25 (Assessment Year 2025–26), the original due date for filing income tax returns was extended to September 15, 2025, after delays in releasing ITR forms and upgrading the e-filing portal. However, the deadline for filing revised or belated returns remains unchanged at December 31, 2025.

According to official data, more than 21 lakh taxpayers have already updated their ITRs for AYs 2021–22 to 2024–25 during FY 2025–26, resulting in additional tax payments exceeding ₹2,500 crore. For the current assessment year alone, over 15 lakh revised returns have been filed so far.

What is the ‘NUDGE’ campaign?

The alerts being sent are part of the government’s “Non-Intrusive Usage of Data to Guide and Enable” (NUDGE) campaign. Under this initiative, the Income Tax Department uses advanced data analytics to identify returns where deductions, exemptions, or refund claims appear potentially ineligible or inconsistent with available data.

Once such cases are flagged, taxpayers are gently “nudged” through SMS or email to recheck their returns and voluntarily correct any errors before further action becomes necessary.

The department has described the campaign as a “trust-first” approach aimed at encouraging voluntary compliance rather than initiating immediate scrutiny or enforcement.

Why are taxpayers being contacted?

Tax experts say the department is matching ITR data with multiple information sources, including Form 16, bank statements, investment disclosures, and even global data-sharing frameworks such as AEOI, CRS, and FATCA for foreign asset reporting.

If discrepancies are detected—such as higher deductions than what employer records show, incorrect PAN details, or questionable refund claims—taxpayers may receive a nudge asking them to verify their filings.

Deductions and exemptions under the scanner

While any incorrect claim may attract attention, certain deductions and exemptions are more likely to be reviewed closely. These include:

Donations to political parties, especially where PAN details of the donee are incorrect or invalid
House Rent Allowance (HRA) claims that do not align with salary records
Deductions or exemptions claimed over and above what is reflected in Form 16
DTAA relief, gratuity exemptions, and other claims requiring specific documentation
Foreign asset disclosures that do not match international reporting data

Experts note that even genuine claims can be flagged if they appear inconsistent with the department’s data.

What should taxpayers do after receiving a nudge?

Tax professionals advise taxpayers not to panic. Instead, they should carefully review their returns and supporting documents.

Key steps include:

Verifying all deductions and exemptions claimed
Matching ITR details with Form 16, bank statements, and investment proofs
Ensuring receipts, invoices, and payment records are available
Checking PAN details of donation recipients or other relevant parties

If any claim is found to be incorrect or unsupported, taxpayers should file a revised return before December 31, 2025, and pay any additional tax along with applicable interest.

If the taxpayer is confident that all claims are genuine and properly documented, no immediate action is required. In such cases, they may wait for further communication from the department.

Is there a risk if taxpayers ignore the alert?

The Income Tax Department has clarified that taxpayers with correct and lawful claims do not need to worry. However, those who choose not to revise their returns now may still file an updated return from January 1, 2026, as permitted under the law, though this would involve payment of additional tax.

Bottom line

The NUDGE campaign is designed to promote voluntary, error-free tax compliance rather than penalise taxpayers. For most individuals, the solution is simple: recheck the return, keep documentation ready, and correct mistakes if any. As long as claims are genuine and supported by records, there is no need for alarm.