India is seeing a steady rise in voluntary tax compliance, with millions of individuals updating or revising their income tax returns this fiscal year. The Central Board of Direct Taxes (CBDT) said on Tuesday that 3.6 million individuals have either updated or revised their tax returns so far in FY26, as the authority continues to prod assessees to pay the correct amount of tax based on information available with it.
Identified taxpayers are being requested through text messages and email under the ‘Non-intrusive Usage of Data to Guide and Enable (NUDGE)’ campaign to correct such errors in view of the due date for filing revised returns by 31 December.
Of the 3.6 million assessees, more than 2.1 million have updated their returns for four assessment years up to FY25, while 1.5 million individuals have revised their returns for the current assessment year, 2025–26, the CBDT said.
Under India’s tax framework, returns filed in any assessment year relate to income earned in the preceding fiscal year.
One can revise the returns filed in the current year until the end of December to correct errors and omissions such as unreported income or incorrect deductions. Taxpayers can also update returns for the previous assessment years.
The CBDT said it has noticed that certain taxpayers have claimed ineligible refunds by availing of deductions or exemptions that they are not entitled to, leading to understatement of income.
These cases have been identified using its risk management framework. These cases include instances of bogus donations to unrecognized political parties. The tax authority also detected that in some cases, either incorrect or invalid permanent account number (PAN) of the donation recipient has been quoted in the tax return.
“This (NUDGE) initiative reflects a trust-first approach to tax administration, under which taxpayers are provided an opportunity to review their income tax returns and voluntarily correct any ineligible claims, wherever required,” the CBDT said.
Deadline matters
“Taxpayers are being given an opportunity to review and revise their returns on or before 31 December 2025. Where claims are genuine and correctly made, no further action is required. However, if discrepancies are identified, timely revision can help avoid further enquiries,” said Amit Maheshwari, tax partner at AKM Global, a tax and consulting firm.
“Even after the revision window, taxpayers may still regularize their position by filing an updated return, though this would involve additional tax outgo," Maheshwari said. "Proactively filing revised/updated returns upon identifying such issues can help taxpayers mitigate the risk of penalties, interest, and prolonged litigation, while aligning with the department’s objective of encouraging timely and voluntary compliance.”
The campaign leverages data analytics and technology to enable a transparent, non-intrusive and taxpayer-centric compliance environment, with an emphasis on guidance and voluntary compliance, the CBDT said.
“It is advised that the concerned taxpayers review their ITRs, verify the correctness of their deduction and exemption claims and revise their returns, if required within the prescribed time by 31 December 2025 to avoid further enquiries in the matter,” the tax board said.
Taxpayers who do not avail of this opportunity may still file an updated return from 1 January, 2026 as allowed under the law, subject to payment of additional tax liability.
Please click here to view the full story on Mint.