Direct Tax

CA. Haresh Kenia, CA. Deepak Lala

  • CBDT Launches Second NUDGE Initiative to Enhance Compliance with Foreign Asset Reporting

    • Press Release | Dated: 27th November 2025

    The Central Board of Direct Taxes (CBDT) has announced the launch of the second phase of its “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” initiative. This program is part of CBDT’s continued efforts to foster voluntary compliance through a data-driven, technology-enabled, and taxpayer-centric approach.

    Key Highlights:

    • Objective: To improve accurate reporting of foreign assets and foreign source income by taxpayers, particularly in Schedule FA and Schedule FSI of the Income Tax Return (ITR).

    • Background: The first NUDGE campaign (November 2024) saw commendable success, leading to disclosures by over 24,600 taxpayers, involving foreign assets worth ₹29,208 crore and foreign income of ₹1,089.88 crore.

    • Information Source: CBDT utilizes data from the Automatic Exchange of Information (AEOI) in the form of Common Reporting Standards (CRS), and the Foreign Account Tax Compliance Act (FATCA) frameworks to identify potential non-disclosure cases.

    • New Campaign: Starting 28th November 2025, targeted taxpayers will receive communications via SMS and email, urging them to verify and rectify non-disclosures for AY 2025-26 by filing revised returns before 31st December 2025.

    • Compliance Mandate: Disclosure of foreign assets and income is mandated under both the Income-tax Act, 1961 and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

    • Technology-led Approach: The CBDT continues to adopt a PRUDENT tax administration strategy, leveraging data analytics to reduce compliance burdens and promote trust-based governance aligned with the national vision of “Viksit Bharat.”

    • Taxpayers are encouraged to comply within the timeline and can refer to www.incometax.gov.in for guidance on CRS, FATCA, Schedule FA, and Schedule FSI.

  • CBDT Flags Bogus Deduction Claims in Fresh NUDGE Campaign

    • Press Release | Dated: 13th December 2025

    The Central Board of Direct Taxes (CBDT) has launched another targeted “NUDGE” initiative aimed at identifying and rectifying bogus claims of deductions, especially under sections 80GGC and 80G of the Income-tax Act, 1961. This move is part of CBDT’s data-driven strategy to curb tax evasion and promote voluntary compliance.

    Key Highlights:

    • Bogus Deductions Detected: The campaign follows enforcement actions against intermediaries and agents who were found assisting taxpayers in filing returns with fraudulent donation claims to Registered Unrecognised Political Parties (RUPPs) and Charitable Trusts.

    • Misuse of Entities: Investigations revealed that many RUPPs were non-functional, non-filers, and allegedly involved in hawala transactions, cross-border remittances, and issuing fake donation receipts.

    • Data Analytics in Action: High-risk patterns were identified using advanced data analytics. A significant number of taxpayers were found to have claimed deductions without proper verification of the donee entities.

    • Corrective Action Initiated: Many taxpayers have already revised or updated their ITRs for AY 2025-26 and earlier years in response to these findings.

    • NUDGE Campaign Initiated: From 12th December 2025, SMS and email alerts are being sent to affected taxpayers, encouraging them to review and correct their claims through revised or updated returns.

    • Awareness Note: Taxpayers are advised to verify the authenticity of donation recipients before claiming deductions and to ensure updated contact details in their filings to receive timely communication from the Department.

    Note: Additional guidance on deduction eligibility and ITR updating procedures can be accessed at www.incometax.gov.in.

  • Expansion of Authorised Banks Under Capital Gains Account Scheme

    • Notification S.O. 5294(E) [F. No. 162/2025/F. No. 370142/23/2024-TPL] | Dated: 19th November 2025

    The Central Government has notified an updated list of banks authorised to receive deposits and maintain accounts under the Capital Gains Account Scheme, 1988, in accordance with clause (e) of paragraph 2 of the Scheme.

    This notification in continuations upon earlier notifications G.S.R. 725(E) dated 22nd June 1988 and G.S.R. 859(E) dated 30th November 2012.

    All branches, excluding rural branches, of the following banks are now authorised under the Scheme:

    1. HDFC Bank Ltd

    2. ICICI Bank Ltd

    3. Axis Bank Ltd

    4. City Union Bank Ltd

    5. DCB Bank Ltd

    6. Federal Bank Ltd

    7. IDFC FIRST Bank Ltd

    8. IndusInd Bank Ltd

    9. Jammu and Kashmir Bank Ltd

    10. Karnataka Bank Ltd

    11. Karur Vysya Bank Ltd

    12. Kotak Mahindra Bank Ltd

    13. RBL Bank Ltd

    14. South Indian Bank Ltd

    15. Yes Bank Ltd

    16. Dhanlaxmi Bank Ltd

    17. Bandhan Bank Ltd

    18. CSB Bank Ltd

    19. Tamilnad Mercantile Bank Ltd

    Definition of Rural Branch: For the purposes of this notification, a rural branch refers to any branch located in an area with a population of less than 10,000 as per the 2011 census.

    This measure broadens the scope and convenience for taxpayers in availing the Capital Gains Account Scheme by enhancing institutional access.

    Readers should refer to the full official notification for further operational details and implementation guidelines.

  • Initiative to Promote Voluntary Review of Deduction and Exemption Claims

    • Press Release | Dated: 23rd December 2025

    The Central Board of Direct Taxes (CBDT) has launched a focused initiative encouraging taxpayers to voluntarily review their Income Tax Returns (ITRs) for Assessment Year 2025–26, particularly in cases where potentially ineligible deductions or exemptions may have been claimed, resulting in understatement of income.

  • Under the risk management framework, CBDT has identified cases where:

    • Bogus donations to Registered Unrecognised Political Parties (RUPPs) are suspected.

    • Ineligible deductions or exemptions have been claimed.

    • Incorrect or invalid PANs of donees have been used.

    • Errors in the quantum of deduction or exemption claimed are evident.

  • Targeted taxpayers are being contacted through SMS and e-mail under the “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” initiative. They are advised to revisit and revise their ITRs on or before 31st December 2025, the deadline for filing revised returns.

  • The initiative reflects a non-intrusive, transparent, and guidance-based tax administration, allowing taxpayers the opportunity to rectify discrepancies proactively.

  • Over 21 lakh taxpayers have already updated their ITRs for AYs 2021–22 to 2024–25, contributing more than ₹2,500 crore in taxes. Additionally, more than 15 lakh revised ITRs have been filed for AY 2025–26.

  • Important Clarifications:

    • Taxpayers with genuine and lawful claims need not take any further action.

    • Taxpayers missing the 31st December deadline may still file updated returns from 1st January 2026, subject to applicable additional tax liability.

Taxpayers are encouraged to ensure accuracy in their claims and take corrective measures voluntarily to avoid scrutiny and penalties.