CBDT Flags Ineligible Deductions, Urges Voluntary Correction Of ITR Claims By Dec 31

New Delhi, Dec 24 (KNN) The Central Board of Direct Taxes (CBDT) has launched a new initiative urging taxpayers to voluntarily review and correct ineligible claims for deductions and exemptions in their income tax returns (ITRs) for the assessment year (AY) 2025–26, ahead of the December 31 deadline for filing revised returns.

Under the Non-intrusive Usage of Data to Guide and Enable (NUDGE) campaign, the Income Tax Department has identified cases where taxpayers may have claimed deductions or exemptions to which they were not entitled, resulting in an understatement of income, the CBDT said in an official statement.

Data Analytics and Risk Assessment

According to the CBDT, cases have been identified through its risk management framework and advanced data analytics. 

These include instances of alleged bogus donations to Registered Unrecognised Political Parties (RUPPs), incorrect or invalid Permanent Account Numbers (PANs) of donees, and errors in the quantum of deductions or exemptions claimed.

The tax authority said such discrepancies may have led to ineligible refunds being claimed in certain returns.

Trust-First Compliance Approach

The initiative reflects a ‘trust-first’ approach to tax administration, the CBDT said, providing taxpayers an opportunity to review their filings and voluntarily correct errors without immediate enforcement action. 

Taxpayers have been advised to verify the accuracy of their deduction and exemption claims and revise their returns, if required, within the prescribed timeframe to avoid further scrutiny.

However, the CBDT clarified that taxpayers whose claims are genuine and in accordance with the law are not required to take any action.

Compliance Trends

During FY 2025–26, over 21 lakh taxpayers have updated their ITRs for assessment years 2021–22 to 2024–25, resulting in the payment of more than Rs 2,500 crore in taxes. Additionally, more than 15 lakh returns have already been revised for the current assessment year, AY 2025–26.

Updated Returns Option

The CBDT also noted that taxpayers who do not avail of the current opportunity may still file an updated return from January 1, 2026, as permitted under law, subject to payment of additional tax liability.

(KNN Bureau)