New Delhi | December 23, 2025 — With just days left before the year-end cut-off for revising income tax returns, India’s tax administration has stepped up a tech-led “trust-first” outreach that is reshaping how refunds, deductions and foreign asset disclosures are being policed.
On December 23, 2025, the Central Board of Direct Taxes (CBDT) said it has rolled out a data-driven NUDGE campaign for Assessment Year (AY) 2025–26, urging taxpayers to voluntarily review and correct deduction and exemption claims that its risk analytics has flagged as potentially ineligible — including suspected cases of bogus donations to Registered Unrecognised Political Parties (RUPPs) and other inadmissible claims. [1]
The timing is not accidental. December 31, 2025 is the last day to file a revised (and belated) return for AY 2025–26. Miss that window, and many corrections shift into the updated return (ITR-U) route from January 1, 2026 — often with added cost and important limitations. [2]
At the same time, a separate but parallel compliance push around undisclosed foreign assets has intensified in recent weeks, with several reports saying multinational companies (MNCs) have been asked to nudge employees to disclose overseas holdings and foreign-sourced income before the deadline — amid tighter data-matching through global information-sharing frameworks. [3]
Why taxpayers are getting SMS and email alerts from the Income Tax Department
The CBDT’s December 23 statement — reported across multiple outlets — frames the outreach as advisory, designed to help taxpayers correct mistakes voluntarily before deeper scrutiny. [4]
According to the department, its risk management framework (backed by “advanced data analytics”) has picked up patterns that suggest:
- Ineligible deductions/exemptions may have been claimed in the ITR, resulting in understatement of income and potentially ineligible refunds. [5]
- Some returns appear to include bogus donation claims to RUPPs, along with incorrect or invalid PANs of donees. [6]
- In certain cases, the issue may simply be an error in the extent/amount of deduction or exemption claimed, rather than a deliberately false claim. [7]
A key point often missed in the social media panic: CBDT has said taxpayers whose claims are genuine and correctly made “are not required to take any further action.” [8]
“Your ITR refund is on hold”: why refunds are getting stuck
One reason the campaign is drawing outsized attention is that it overlaps with what many salaried taxpayers care about most: refund timelines.
In the days leading up to the CBDT statement, taxpayers posted online about receiving messages that their return processing had been paused under a risk-management filter. Mint reported the department’s nudge drive and the wider context of refund checks tightening this season. [9]
A common message cited in coverage effectively says the ITR processing has been “temporarily kept on hold” under a risk framework due to discrepancies linked to a refund claim (with details to follow by email). [10]
The Indian Express reported that the tax department is “examining” returns with refunds above a certain threshold (reported as ₹50,000) and that people seeking quick refunds are being urged to use the remaining time in December to correct errors and “claim higher refund, if needed.” [11]
The CBDT’s December 23 messaging also comes amid a measurable slowdown in refund outflows: income tax refunds totalled ₹2.97 lakh crore between April 1 and December 17, a 13.52% decline versus the same period the previous year, according to data cited in multiple reports. [12]
15 lakh revised ITRs filed — and what that number signals
Alongside the nudge advisory, the Income Tax Department has pointed to early “results” from the compliance push.
On December 23, the department said over 15 lakh taxpayers have filed a revised return for AY 2025–26. [13]
It also said that during FY 2025–26, more than 21 lakh taxpayers have filed updated returns for earlier assessment years (reported as AYs 2021–22 to 2024–25) and paid over ₹2,500 crore in taxes. [14]
The message behind those figures is straightforward: the department is betting that voluntary correction now (via revised returns) is cheaper for taxpayers and faster for the system than enforcement-heavy post-facto scrutiny.
The December 31 deadline: revised return vs updated return
Revised return (until December 31, 2025 for AY 2025–26)
For taxpayers who have already filed their return for AY 2025–26 and discovered an error — a missed income entry, an incorrect deduction amount, a wrong PAN in a donation claim, or mismatched TDS details — the cleanest fix is often a revised return, but only up to December 31, 2025. [15]
Updated return (ITR-U): available later, but with constraints
After December 31, taxpayers can still correct many issues using an updated return (ITR-U) — but experts caution that ITR-U has limitations, including that it generally cannot be used to claim or increase a refund, and it can’t be filed in ways that reduce tax liability in certain scenarios. [16]
Policy-wise, Budget/Finance Bill amendments in 2025 expanded the time window and introduced additional “slabs” of extra tax for late updated returns. The Finance Bill text describes extending the updated return time limit from 24 months to 48 months, and adding 60% and 70% additional income-tax bands for later filing periods, effective April 1, 2025. [17]
What’s driving the “wrongful deduction” focus: political donations and invalid PANs
A consistent thread in the December 23 coverage is the CBDT’s emphasis on deductions that appear to be tied to bogus donation claims — especially those routed to Registered Unrecognised Political Parties (RUPPs) — and errors involving incorrect/invalid PANs of donees. [18]
This is not an isolated December event. Earlier this month, the government also publicly described a targeted NUDGE push against “bogus donation claims,” urging taxpayers to revise returns and warning of potential consequences for false claims, including penalty and prosecution provisions in serious cases. [19]
For taxpayers, the practical takeaway is less about headlines and more about documentation: if you claimed a deduction, your best defense is having valid receipts, correct PAN details, and a claim that fits the limits and conditions of the law.
Foreign assets: the other compliance sprint converging on December 31
While the December 23 CBDT statement focused heavily on deductions, the wider year-end compliance story includes a second front: foreign assets and foreign-source income reporting.
What’s happening with MNC employees
The Economic Times reported that some multinational employers have been asked by the tax department to push employees in India to disclose undisclosed foreign assets and earnings, with the communication warning of possible assessment proceedings, a ₹10 lakh fine, and even prosecution under the Black Money law for non-disclosure. [20]
Moneycontrol reported a similar employer-driven push, highlighting that employees holding ESOPs/RSUs/shares in overseas entities may need to disclose them “irrespective of whether any income has been realised,” and noted the December 31 cut-off to revise/belated-file for AY 2025–26. [21]
Why the department knows more now
The official backbone for this is global data exchange. A PIB release explains that CBDT uses Automatic Exchange of Information (AEOI) data — including information shared under CRS and via the US under FATCA — to identify cases where foreign assets appear to exist but are not reported in the ITR. [22]
That same release says CBDT’s second NUDGE campaign on foreign assets involves sending SMS and email communications (starting November 28, 2025) to identified taxpayers, urging them to revise returns by December 31, 2025 and correctly report details in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income) for AY 2025–26. [23]
What must be disclosed
ET Wealth Online, summarising the department’s email text and tax advisors’ explanations, says the outreach references foreign-held accounts/income (such as bank accounts, interest, dividends, investments) and urges revision if Schedule FA was not included. It also lists examples of foreign assets taxpayers are typically expected to disclose (such as overseas property, foreign accounts including dormant accounts, signatory authority, and certain overseas policies). [24]
A critical nuance: does filing ITR-U “protect” you from Black Money Act penalties?
This is where the story gets more complex — and more urgent.
The Economic Times report highlights a view from a tax advisor that some taxpayers wrongly assume that disclosure through an updated return (ITR-U) automatically shields them from the Black Money Act’s penalty framework, and it flags what was described as a “legal gap” argument around penalty waiver provisions. [25]
Separately, other explainers have emphasised that the consequences for non-disclosure can be severe, and that taxpayers should treat the December 31 revision window as the lowest-risk path if they need to make corrections in foreign asset reporting. [26]
(If you’re in this bucket, it’s a strong signal to speak with a qualified tax professional quickly, because the facts vary sharply based on residency status, the asset type, and whether income arose.)
What taxpayers should do right now before December 31, 2025
This is not legal or tax advice — just a practical checklist drawn from what the department and multiple reports are pointing to.
1) If you received an SMS/email about deductions, exemptions, or a refund hold
- Log in to the income tax e-filing portal and read your registered-email communications carefully (many notices say “details have been emailed”). [27]
- Reconcile your return against Form 26AS, AIS and TIS (this is repeatedly advised in coverage of the intimation emails). [28]
- Verify deduction claims that are frequently mismatched in salaried cases (reports cite examples like 80C/80D/HRA, especially where employees claimed deductions in the ITR but didn’t declare them to employers during TDS calculation). [29]
- If you find an error, consider filing a revised ITR by December 31 rather than waiting. [30]
2) If your issue involves donations (including political donations)
- Double-check the PAN details you entered for the donee and ensure the claim matches eligibility and limits. The CBDT has explicitly flagged incorrect/invalid PANs and questionable donation claims in its messaging. [31]
- Keep documentation ready (receipts, proofs) in case of follow-up.
3) If you may have foreign assets or foreign-source income
- First confirm your residency status for the relevant year — disclosure requirements differ materially based on whether you are a resident (and whether you are ordinarily resident), as multiple advisories note. [32]
- Identify whether you hold overseas assets that commonly trigger reporting: foreign bank accounts, overseas shares/RSUs/ESOPs, overseas property, signatory authority, etc. [33]
- Ensure you are filing the correct ITR form (some coverage notes that foreign asset reporting typically requires forms beyond ITR-1/ITR-4). [34]
- If something was missed, the official nudge communications urge revision by December 31, 2025. [35]
4) If you’re counting on a refund
- Be prepared for additional verification if your return is flagged under the risk framework; media reports suggest heightened checks in certain refund cases. [36]
- If your return gets processed after December 31 and an error is discovered, you may be pushed to remedies like rectification or ITR-U, which may not help if your goal is to increase a refund. [37]
The bigger shift: compliance by data, not just by notice
Zooming out, the December 23 developments underscore a structural change in India’s tax enforcement posture:
- Risk analytics are increasingly deciding what gets held, queried, or nudged — especially when refund claims and deduction patterns look inconsistent with third-party data. [38]
- Cross-border data pipelines like CRS/FATCA/AEOI are making foreign asset non-disclosure far more detectable than it was even a few years ago. [39]
- The department’s messaging is explicitly behavioural: correct voluntarily now, or face a more expensive (and riskier) path later. [40]
For taxpayers, the practical conclusion is clear: the last week of December 2025 is no longer just a filing deadline — it’s a correction deadline.
References
1. www.livemint.com, 2. www.livemint.com, 3. m.economictimes.com, 4. www.livemint.com, 5. www.livemint.com, 6. www.livemint.com, 7. m.economictimes.com, 8. www.livemint.com, 9. www.livemint.com, 10. www.business-standard.com, 11. indianexpress.com, 12. www.livemint.com, 13. www.theweek.in, 14. m.economictimes.com, 15. www.livemint.com, 16. m.economictimes.com, 17. www.indiabudget.gov.in, 18. www.livemint.com, 19. www.pib.gov.in, 20. m.economictimes.com, 21. www.moneycontrol.com, 22. www.pib.gov.in, 23. www.pib.gov.in, 24. m.economictimes.com, 25. m.economictimes.com, 26. www.moneycontrol.com, 27. m.economictimes.com, 28. m.economictimes.com, 29. m.economictimes.com, 30. www.livemint.com, 31. m.economictimes.com, 32. m.economictimes.com, 33. m.economictimes.com, 34. m.economictimes.com, 35. www.pib.gov.in, 36. indianexpress.com, 37. m.economictimes.com, 38. www.livemint.com, 39. www.pib.gov.in, 40. www.moneycontrol.com
