Income Tax Refund “Risk Management” SMS Explained: CBDT’s NUDGE Campaign Flags Ineligible Deductions in ITRs for AY 2025-26

New Delhi | December 24, 2025 — A fresh wave of SMS and email alerts from India’s Income Tax Department has left many taxpayers alarmed — especially those still waiting for refunds. The message that refunds have been kept “on hold” under a “risk management process” has triggered confusion across social media and tax helpdesks, with people wondering whether the communication is a notice, a penalty warning, or the start of scrutiny.

On December 24, the Central Board of Direct Taxes (CBDT) — the apex body of the Income Tax Department — reiterated that the outreach is advisory and part of a data-driven “NUDGE” campaign. The focus: deduction and exemption claims that analytics have flagged as potentially ineligible, including cases linked to bogus political donations, incorrect/invalid PAN details, and errors in the amount of deductions/exemptions claimed. ^[1]

With the December 31, 2025 deadline approaching for filing revised returns for the current assessment year, the department is urging flagged taxpayers to review their Income Tax Returns (ITRs), correct mistakes if needed, and avoid further enquiries. ^[2]

What is the CBDT “NUDGE” campaign — and why are taxpayers getting these alerts?

CBDT’s “NUDGE” (Non-intrusive Usage of Data to Guide and Enable) campaign is positioned as a “trust-first” compliance initiative: instead of immediately moving to enforcement, the department is giving taxpayers an opportunity to voluntarily review and correct potentially ineligible claims identified using risk management and advanced data analytics. ^[3]

According to the official CBDT press release dated December 23, 2025, the department observed instances where certain taxpayers claimed ineligible refunds by availing deductions or exemptions they were not entitled to — resulting in an understatement of income. ^[4]

Key triggers highlighted by CBDT include:

Bogus donations to Registered Unrecognised Political Parties (RUPPs) and other ineligible claims ^[5]
Incorrect or invalid PANs of donees ^[6]
Errors in the extent/quantum of deduction or exemption claimed ^[7]

Why are income tax refunds being delayed or put “on hold”?

For many taxpayers, the biggest impact has been refund delays. Multiple reports on December 24 noted that refunds are being paused where returns are flagged under the risk management process — especially when the system detects discrepancies around deductions/exemptions that affect a refund claim. ^[8]

The Indian Express reported that high-value deductions and refunds above ₹50,000 have been under scrutiny, though sources said the department has begun issuing refunds and the credit could reflect in the coming days. ^[9]

The essential point: the “risk management” alert is not automatically an accusation of wrongdoing. It typically means the system wants the taxpayer to re-check specific elements before processing continues. India Today also stressed the department’s line that the alerts are not punitive and are meant to prompt verification and voluntary correction. ^[10]

Which deductions and exemptions are under the scanner?

While CBDT’s press release describes the issue broadly, December 24 reporting across outlets added practical context on what often triggers mismatches.

1) Political donations and donation-linked deductions

Political donation claims — especially where the recipient details don’t validate — have emerged as a key red flag area. CBDT explicitly mentioned bogus donations to RUPPs in its campaign description. ^[11]

The Indian Express “Explained” piece cited sources claiming analytics flagged a large set of suspicious donation-related deductions (including those routed through questionable/non-existent entities), illustrating why donation claims are attracting attention this year. ^[12]

2) HRA and common salaried deductions (80C, 80D)

Times of India and Economic Times coverage on December 24 highlighted that many salaried taxpayers receiving alerts are seeing questions around popular claims such as HRA, and common deductions like Section 80C and 80D — particularly where the department’s data doesn’t align with what was claimed in the filed return. ^[13]

3) PAN validation issues and “quantum” mismatches

Incorrect PANs, invalid PANs, or errors in the “extent” of deductions/exemptions claimed are explicitly named by CBDT as issues the campaign is trying to correct. ^[14]

4) Cases even under the “new tax regime”

Some taxpayers have reported receiving messages despite opting for the new regime (where most deductions/exemptions aren’t available, barring limited items like the standard deduction). The Indian Express reported examples where the issue may be something else — such as the wrong ITR form being used or other data-category mismatches — even if deductions weren’t claimed. ^[15]

Important deadlines: What happens on December 31, 2025?

December 31 is now the critical date taxpayers must keep in mind for AY 2025-26.

Why December 31 matters

CBDT’s advisory tells flagged taxpayers to revise returns, if required, within the prescribed time by 31 December 2025 to avoid further enquiries. ^[16]
Tax reporting on December 24 consistently described December 31, 2025 as the last date to file revised returns for the current assessment year. ^[17]

Missed the deadline? Updated return begins January 1, 2026 — but costs more

CBDT clarified that taxpayers who do not avail of this opportunity may still file an updated return from January 1, 2026, subject to additional tax liability as permitted under law. ^[18]

What should you do if you got the “refund held under risk management” SMS?

Here is a practical checklist built from what the department and December 24 coverage are advising taxpayers to do.

Step 1: Don’t panic — and don’t ignore it

Several reports emphasize that the outreach is advisory, not an immediate enforcement action. Still, ignoring it can prolong delays and may lead to follow-up action later if an error truly exists. ^[19]

Step 2: Check your email and your filed ITR carefully

The SMS commonly indicates that an email with details has been sent to the registered email address. Taxpayers should locate that email and review the mismatch category mentioned. ^[20]

Step 3: Reconcile with the core documents (this is the fastest way to validate your claim)

Across multiple December 24 reports, the recurring advice is to reconcile deductions/exemptions and income details with:

Form 16
Form 26AS
Annual Information Statement (AIS) and Taxpayer Information Summary (TIS)
Donation receipts / supporting proofs and related details ^[21]

Step 4: If you find a genuine mistake, file a revised return before Dec 31

CBDT’s guidance is direct: review the return, verify the correctness of deduction/exemption claims, and revise the return if required by December 31, 2025. ^[22]

Step 5: If your claim is genuine, you may not need to do anything — but keep your proofs ready

CBDT has explicitly stated that taxpayers whose deduction/exemption claims are genuine and correctly made in accordance with law are not required to take any further action. ^[23]

Times of India also underscored that even if a taxpayer receives the communication but believes there is no inconsistency, the key is ensuring proper documentation exists for each claim. ^[24]

Step 6: Ensure your mobile number and email are correct

One of the simplest but most overlooked issues: missing the detailed email because contact details are outdated. The News Minute reported CBDT’s advice that taxpayers should ensure correct mobile and email IDs are reflected in department records so they don’t miss communications. ^[25]

A major point of confusion: “I didn’t declare deductions to my employer — is that illegal?”

Many salaried taxpayers claim deductions directly in the ITR even if those weren’t factored into TDS by the employer. December 24 coverage noted that this does not automatically make the claim invalid — but it does increase the importance of having investment proofs/receipts and other supporting evidence ready. ^[26]

How big is this campaign?

CBDT’s own numbers suggest the department is leaning heavily on “voluntary compliance” mechanisms:

More than 21 lakh taxpayers have already filed updated returns for AYs 2021–22 to 2024–25 and paid over ₹2,500 crore in taxes during FY 2025–26. ^[27]
For the current assessment year (AY 2025–26), more than 15 lakh ITRs have already been revised. ^[28]

Bottom line: What taxpayers should do this week

If you received an Income Tax Department SMS/email about refund risk management or deductions/exemptions:

Read the email and identify what category is being questioned. ^[29]
Reconcile your return with Form 16, AIS/TIS, Form 26AS, donation and investment proofs. ^[30]
File a revised return before December 31, 2025 if anything is incorrect. ^[31]
If everything is correct, keep documentation ready and watch for further communication — CBDT says genuine claims need no further action. ^[32]

As the year-end deadline closes in, this isn’t just about avoiding scrutiny — it’s also about preventing your refund from getting stuck in a verification loop when a quick document check (or a timely revision) can resolve the issue.

Note: This article is for general information based on public reports and official statements. Tax situations vary; consider consulting a qualified tax professional for case-specific advice.

References

Income Tax Refund “Risk Management” SMS Explained: CBDT’s NUDGE Campaign Flags Ineligible Deductions in ITRs for AY 2025-26 — What to Do Before December 31