Amid rising complaints of stuck refunds, Income Tax Dept cites high ineligible claims; asks taxpayers to file revised ITRs

“It is advised that the concerned taxpayers review their Income-tax Returns (ITRs), verify the correctness of their deduction and exemption claims, and revise their returns, if required, within the prescribed time by 31 December 2025, so as to avoid further enquiries in the matter,” it said. Taxpayers and chartered accountants have taken to social media to complain about the stuck refunds, with many even claiming that their refunds have been stuck despite not having received any SMS or mail from the Department for any discrepancies. The return filing deadline for individuals and non-audit cases was September 16 this year. As per the latest official data for April 1-December 17, refunds were 13.52 per cent lower than last year.

ITRs filed so far and updated ITRs

So far, over 15 lakh income tax returns have already been revised for AY 2025-26, it said. Separately, over 21 lakh taxpayers have updated their ITRs for assessment years 2021-22 to 2024-25 and paid over Rs 2,500 crore in taxes during the ongoing financial year, it added.

A revised return can be filed three months before the end of the assessment year, that is, December 31. An updated return (ITR-U) can be filed by a taxpayer within 48 months from the end of the assessment year (increased from 24 months in the Finance Act, 2025). An updated return can be filed even if the return was not previously filed. If the updated return is filed during 24-36 months from the end of the relevant AY, then additional tax payable is 60 per cent of the total tax and interest on additional income. For ITR-U filed 36-48 months after the AY, then 70 per cent additional tax is payable of the aggregate tax and interest.

Since the messages and emails under the NUDGE campaign were issued in December, several taxpayers are now asking for an extension of the revised return filing deadline by a month to January 31.

What is the Income Tax Dept’s NUDGE campaign?

Under the “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” campaign, the I-T Department, whi­ch comes under the purview of the Central Board of Direct Taxes, has sent messages and emails to several lakh taxpayers for discrepancies regarding deductions, especially as donations to unrecognised political parties or charitable institutions, or for mismatches in tax deducted at source and Annual Information Statement or non-disclosure of foreign assets and income.

Terming it as an initiative to encourage taxpayers to voluntarily review deduction or exemption claims, the Department said these cases have been identified under the risk management framework with the use of advanced data analytics. “The framework includes instances where bogus donations to Registered Unrecognised Political Parties (RUPPs) and other ineligible deductions or exemptions appear to have been claimed in the Income-tax Returns (ITRs).

It has also been observed that, in some cases, either incorrect PANs or invalid PANs of donees have been quoted. Some cases also contain errors relating to the extent of deduction or exemption claimed,” it said. Taxpayers whose “deduction or exemption claims are genuine and correctly made in accordance with law” are not required to take any further action, it said.