The Income Tax Department is ramping up its scrutiny of tax returns, resulting in delays in income tax refunds for many taxpayers this year. This heightened vigilance is largely due to efforts to verify deductions and exemptions claimed by individuals. As the December 31, 2025 deadline beckons for filing revised or belated returns, the department has initiated a NUDGE campaign to encourage taxpayers to address any inaccuracies in their filings, as numerous claims have been marked ineligible.
Importance of the December 31, 2025 Deadline
The December 31, 2025 deadline is critical for taxpayers needing to file revised Income Tax Returns (ITRs) for the Assessment Year 2025-26. Missing this deadline could lead to delayed refunds, especially for returns with errors or gaps in information. Reports indicate that the Income Tax Department has started notifying taxpayers via emails and SMS about ineligible deductions or exemptions they have claimed. Taxpayers are urged to correct any mistakes and submit revised returns before the deadline to sidestep complications. Once the Centralised Processing Centre processes a return, any discrepancies observed will attract further scrutiny. If issues arise post-deadline, taxpayers may lose the opportunity to amend their returns, potentially leading to additional verification or assessment proceedings.
NUDGE Campaign Encourages Compliance
The NUDGE campaign launched by the Income Tax Department aims to assist taxpayers in filing accurate returns. Chartered Accountant Suresh Surana has emphasized that after the December 31 deadline, taxpayers cannot revise their returns to correct any mistakes, even if the return is pending processing. This campaign serves as a reminder, especially for salaried individuals, to ensure their filings are consistent with employer records. Many employees have received notices from the department regarding discrepancies in their claims, particularly around deductions under Sections 80C, 80D, or House Rent Allowance, which were not disclosed to employers during tax deduction at source.
Common Reasons for Delays in Tax Refunds
Delays in receiving refunds can stem from various factors, including mismatches between reported income and data from the Annual Information Statement or Tax Information Summary. Errors may result from excessive deduction claims, incorrect House Rent Allowance, unsupported deductions for insurance, or ineligible donations. Failing to report income beyond salary, such as capital gains from mutual funds or crypto assets, can also lead to notices from the Income Tax Department. Abhishek Soni, CEO of Tax2win, highlighted that these intimations indicate a mismatch between the return and the supporting documentation for claimed deductions. Taxpayers are advised to promptly address these notices to avoid potential tax demands or penalties.
Consequences of Ignoring Notices
Disregarding notices from the Income Tax Department can result in serious consequences, including tax liabilities and interest charges. Maneesh Bawa, a partner at Nangia Global, advised that taxpayers should file revised returns within the permitted timeframe to correct any identified errors. Failing to address discrepancies could lead to disallowance of claims and heightened scrutiny from the department. Taxpayers are encouraged to take these notices seriously and ensure the accuracy of their tax filings to avoid complications in the future.
Digihunt is not a financial advisor and this is not investment advice.