Many taxpayers have been informed by the Income Tax Department that their refunds are pending because of ITR discrepancies. By December 31, 2025, the indicated taxpayers must submit updated returns; otherwise, they would be subject to increased tax obligations.
Due to a discrepancy in income tax return (ITR) filing information, the Income Tax Department recently sent SMS and email alerts to a number of taxpayers informing them that their income tax refund has been placed on hold under a risk management provision.
Additionally, the department has instructed these taxpayers to file an updated income tax return by December 31st. Online, this has caused uncertainty among taxpayers and sparked worries, one of which is who needs to file the updated ITR.
Who must submit an updated return?
The I-T Department's alerts are a part of a new data-driven NUDGE initiative that identifies false claims for exemptions or deductions.
In a statement on Tuesday, December 23, the I-T Department stated, "It has been observed that certain taxpayers have claimed ineligible refunds by utilizing deductions or exemptions to which they are not entitled, resulting in understatement of income."
For Assessment Year (AY) 2025–2026, the department has identified such cases within the context of risk management.
This included instances where ITRs appeared to have claimed invalid deductions or exemptions, as well as fraudulent donations to Registered Unrecognized Political Parties (RUPPs).
Additionally, it has been observed that taxpayers have occasionally given inaccurate or invalid PAN information. Errors pertaining to the claimed amount of deduction or exemption are also present in certain circumstances.
These "identified taxpayers are being requested through SMS and email under the ‘Non-intrusive Usage of Data to Guide and Enable (NUDGE)’ campaign to correct such errors, in view of the due date for filing revised ITRs by 31 December 2025" , according to the announcement.
Taxpayers who make accurate claims for deductions or exemptions, however, are not subject to additional action.
According to the government, "taxpayers whose deduction or exemption claims are genuine and correctly made in accordance with law are not required to take any further action."
What should worried taxpayers do?
"It is advised that the concerned taxpayers review their 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," the I-T Department added.
What happens if you fail to meet the deadline of December 31st?
If taxpayers miss the present deadline, they can file amended forms starting on January 1, 2026, but they will still be responsible for paying any additional taxes.
The I-T Department stated, "It is clarified that taxpayers who do not take advantage of this opportunity may still file an updated return from January 1, 2026, as permitted by law, subject to payment of additional tax liability."
How many updated ITRs have been submitted thus far?
Over 21 lakh taxpayers amended their ITRs for AYS 2021-22 to 2024-25 in FY 2025-26, and they paid more than ₹2,500 crore in taxes, according to the Income Tax Department. For the current assessment year, AY 2025–2026, more than 15 lakh ITRs have already been updated.
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