Under the tax department’s NUDGE campaign, more than 1.32 crore updated returns have been submitted in the past four years. This results in additional tax payments of Rs 16,083 crore.
Launched in 2024, the Central Board of Direct Taxes’ compliance initiative leverages advanced data analytics, behavioural nudges, and targeted digital communication to detect discrepancies in Income Tax Returns.
By cross-referencing financial information from multiple sources, the framework systematically identifies potential under-reporting of income, non-disclosure of foreign and domestic assets, and unverified deduction claims before initiating formal audit proceedings.
The income tax department does not initiate scrutiny proceedings; instead, they send targeted communications to taxpayers, asking them to analyse their filings and amend or update them, if required.
Initiatives for the Improvement of Compliance
Since April 2026, 304 outreach programmes have been conducted by the income tax department in the nation.
To ensure a seamless transition and greater statutory awareness, the department conducted comprehensive sessions in English, Hindi, and key regional languages.
These interactive sessions were designed to familiarise tax practitioners, corporate assessees, and other industry stakeholders with the structural provisions of the IT Act, 2025, the procedural framework under the IT Rules, 2026, and the revised filing protocols for the redesigned tax return forms.
As per a CBDT member, the new tax structure has the purpose of reducing the compliance burden, delivering transparency and certainty, and making tax administration more citizen-centric, technology-driven, and efficient.
The new tax regime has also witnessed a significant increase in adoption. For Assessment Year 2026-27, more than 97% of ITR-1 returns and over 95% of ITR-2 returns were filed under the new regime. According to the news report, the Income Tax Department also added 49 lakh first-time filers by July 31, 2026.
As of August 31, 2026, 2.54 crore returns, or 32.48%, were processed within one day of filing. Additionally, tax refunds were issued for approximately 65 lakh returns. This demonstrates how technology-driven tax administration has significantly enhanced processing efficiency.
At present, the income tax department interfaces with around 8 crore taxpayers and collects nearly 600 crore transaction details via mechanisms such as TDS (tax deducted at source), Statement of Financial Transactions (SFT), and the Annual Information Statement (AIS).
Working of the Nudge Campaign
Non-intrusive Usage of Data to Guide and Enable (NUDGE) specifies a transformation in the tax department’s compliance technique from post-facto enforcement to preventive, technology-enabled interventions.
Taxpayers are shortlisted through advanced risk analysis to identify potential mismatches between reported income and the information available to the department. These mismatches may involve unreported assets or income, incorrect deduction claims, excess exemptions, or inconsistencies flagged by third-party data.
The campaign complies with the CBDT’s SAKSHAM framework, a seven-stage compliance strategy that includes data collection, risk analysis, targeted communication, taxpayer assistance, transparency, and continuous evaluation.
Read Also: Step-by-Step Guide to Revised Income Tax Return AY 2026-27
Nationwide awareness programmes have been conducted by the income tax department which was specified by the CBDT member. It includes employers to motivate taxpayers to voluntarily correct discrepancies by filing revised, belated, or updated returns.
Source: www.livemint.com
