Income Tax Department’s NUDGE drive leads to 1.25 crore updated ITRs, ₹9,494 crore extra tax
The Income Tax Department’s technology-driven NUDGE campaign has led to 1.25 crore taxpayers voluntarily revising or updating their income tax returns over the past two financial years, resulting in an additional ₹9,494 crore in tax collections, according to the government.
Replying to a question in the Lok Sabha on Monday, Minister of State for Finance Pankaj Chaudhary said the campaign has helped improve voluntary tax compliance by encouraging taxpayers to correct errors in their returns before enforcement action becomes necessary.
The initiative, launched by the Central Board of Direct Taxes (CBDT), uses data analytics, behavioural insights and digital communication to identify taxpayers whose returns may contain discrepancies, such as under-reporting of income, non-disclosure of assets or excessive deduction claims.
Rather than immediately initiating scrutiny proceedings, the department sends targeted communications asking taxpayers to review their filings and revise or update them if required.
According to the minister, the campaign resulted in 1.25 crore revised or updated ITRs during FY25 and FY26, generating ₹9,494 crore in additional taxes.
How the NUDGE campaign works
NUDGE, short for Non-intrusive Usage of Data to Guide and Enable, marks a shift in the tax department’s compliance strategy from post-facto enforcement to preventive, technology-enabled interventions.
Taxpayers are shortlisted using advanced risk analysis that identifies possible mismatches between reported income and information available with the department. These may include unreported assets or income, incorrect deduction claims, excess exemptions or inconsistencies flagged through third-party data.
The campaign follows the CBDT’s SAKSHAM framework, a seven-stage compliance strategy covering data collection, risk analysis, targeted communication, taxpayer assistance, transparency and continuous evaluation. The department has also carried out nationwide awareness programmes involving employers to encourage taxpayers to voluntarily rectify discrepancies by filing revised, belated or updated returns.
Fraudulent claims under scanner
The government also informed Parliament that the Income Tax Department has detected several cases of wrongful tax reliefs and non-genuine deduction claims over the past five years.
These were identified through data analytics, verification exercises and search and survey operations conducted against entities, professional intermediaries and other persons suspected of facilitating fraudulent claims. Investigations led to evidence of tax evasion and other violations under the Income-tax Act, the minister said.
The department has identified categories of intermediaries involved in facilitating such claims, including tax return preparers and chartered accountants.
Apart from the NUDGE campaign, the tax department has initiated e-verification drives, assessments and reassessments, search and seizure operations, penalties and prosecution wherever warranted. Information relating to tax professionals found involved in such cases has also been shared with relevant regulatory and enforcement bodies, including the Institute of Chartered Accountants of India (ICAI), Chaudhary said.
