Do You Know? Income Tax Department Indulges in NUDGE Awareness Campaigns

In common usage, a nudge means the act of pushing your friend/neighbor with the elbow. It is a way of drawing his attention to something that you want to. This act of pushing is adopted by our (Indian) Income Tax Department to alert taxpayers to rectify their mistakes before issuing any notices.

The NUDGE in Indian Income Tax stands for "Non-Intrusive Usage of Data to Guide and Enable". It is a campaign by the Central Board of Direct Taxes (CBDT) that uses advanced data analytics to identify potential discrepancies in a taxpayer's filed return and encourages them to voluntarily correct the errors.

According to TOI's article (linked at the bottom) dated December 25, some taxpayers received these SMS's/emails. 

Key Aspects of the NUDGE Campaign:

Advisory Nature: 

The communication (via SMS and email) is advisory and not a formal legal notice or the start of an intrusive investigation. It reflects a "trust-first" approach by the tax department to promote voluntary compliance.

Data-Driven: 

The campaign utilises data analytics and information received from various sources, including international information exchange agreements (such as AEOI, CRS, and FATCA), to identify high-risk cases.

Specific Issues: 

The campaign targets particular issues, such as:

• Ineligible deductions or exemptions claimed (e.g., bogus donations to unrecognised political parties).
• Incorrect or invalid Permanent Account Numbers (PANs) of donees or other entities.
• Non-disclosure or underreporting of foreign assets and foreign source income in the ITR's Schedule FA and Schedule FSI.
• Other issues of importance.

What to Do When You Receive a Nudge Message 

Taxpayers who receive a NUDGE message are advised to review their Income Tax Returns (ITRs) for discrepancies and, if necessary, file a revised return within the specified deadline (e.g., by December 31 for the relevant assessment year) to avoid potential penalties or a detailed investigation later.

Taxpayers are advised to carefully verify all deductions and exemptions claimed on their returns against supporting documents to ensure accuracy and compliance.

If discrepancies are identified, taxpayers should correct the figures and file a revised return on or before December 31 to avoid penalties, additional tax liabilities, or further scrutiny by the department.

Individuals whose claims are genuine and in accordance with the law do not need to take any further action. 

However, they may retain documentation in case verification is requested by the department.

Key deductions under scrutiny include House Rent Allowance, donations to political parties, foreign source receipts/payments, and exemptions under the Double Taxation Avoidance Agreement.

We should note that the NUDGE initiative is part of the department’s trust-first approach, which aims to provide taxpayers with an opportunity to voluntarily correct errors in their returns without facing immediate enforcement action. So, we should be thankful and appreciate their cooperation.

For some more news, please read this article from The Times of India dated December 25, 2025.

What is AIS in Income Tax Returns and How it Differs from Form 26AS

A sample of the front page

 An AIS, or Annual Information Statement, is a detailed report introduced by India's Income Tax Department. 

It enables a consolidated view of a taxpayer's financial transactions executed during a year, aiming to encourage voluntary compliance and assist in the pre-filling and submission of Income Tax Returns (ITR). 

This auto-generated statement is available on the Income Tax Portal. This information is compiled automatically by the Tax Department from data collected from various third-party entities that are legally mandated to report financial transactions associated with a taxpayer's Permanent Account Number. 

The AIS contains two Parts- A (providing general information of the taxpayer) and B (financial transactions done by or related to him).

The length of the statement depends on the volume of transactions mentioned under 57 categories of income and expenses in Part B.

Key Details and Features

1. Comprehensive Data Compilation

The AIS includes a broad range of information reported by various entities (like banks, employers, mutual funds, stock exchanges, etc.) using your Permanent Account Number (PAN).

Even the LIC and PF organisations provide their statements regarding your premiums, contributions, etc., to the Tax Department.

 The data thus provided includes:

Salary, interest (from savings accounts, FDs, etc.), and dividend income, if any.

LIC premiums paid in a year and maturity/claims paid.

PF contributions and funds drawn during the said year.

Details of Securities and Mutual Fund transactions.

High-value transactions involving property purchases/sales and large cash deposits/withdrawals.

Foreign Remittances and purchases of foreign currency.

Details of tax payments like TDS, TCS, advance tax, and self-assessment tax.

Any other financial transactions executed during that year with other entities.

2. Taxpayer Information Summary (TIS): 

The AIS is accompanied by a simplified summary called the TIS, which provides an aggregated, category-wise view of your financial data. This summary enables the calculation of Income Tax dues and the balance amount of tax payable. 

The derived value from TIS is used for pre-filling your ITR.

3. Feedback Mechanism for Rectification and Claims

Taxpayers can submit online feedback if they find any incorrect, duplicated, or unfamiliar information in the AIS. 

This feature helps in reconciling data and ensures accuracy before filing the ITR.

4. Accessibility and Available Formats for Download

The AIS can be accessed via the official Income Tax e-filing portal (navigating to the Annual Information Statement under the "Services" tab).

It can be downloaded in various formats, including PDF, JSON, and CSV. 

A mobile app, "AIS for Taxpayer," is also available and can be downloaded from the Google Play Store or the Apple App Store.

AIS vs. Form 26AS

AIS is an extension and a more detailed version of the traditional Form 26AS. While Form 26AS primarily focuses on TDS/TCS details, AIS captures a much wider array of financial information, often including transactions where no tax was deducted. 

Form 26AS is the old format, which has been revamped and enhanced into a comprehensive format type now designated as the Annual Information Statement.

Form 26AS may become obsolete in due course.

Importance of AIS for Taxpayers

Reviewing your AIS is crucial before filing your ITR to ensure all income sources are accurately reported, which helps in:

• Avoiding omissions or under-reporting of income
• Minimizing the risk of receiving tax notices from the Income Tax Department
• Ensuring that the tax credits claimed match the data available to the tax authorities. 

You can access your AIS from the IncomeTax Portal or through the mobile app.

Documents and Forms Needed to File Your ITR Returns

As we all know, an income tax return is a form to be filled out and submitted by each taxpayer before the due date of filing the returns as stipulated in the Income Tax Act. The return is to be filled based on information gathered from reliable documents.

Individuals, HUFs, and Firms with income above the basic exemption limit must file Income Tax Returns yearly, disclosing their total income along with perquisites and details of tax paid or deducted at source, taxable income, tax liability, or refundable dues. 

While doing so, they are required to keep certain documents on hand to support their figures.

In this article, let us study the details of such documents.

I am providing the information regarding some of those documents in the below sections.

Important Documents Needed for Submission of ITRs

Some of the documents that serve as the base for filing a return are as follows:

• PAN card
• Salary slips or income statements
• Bank Statements
• Form 16, 16A, 16B, 16C (whichever applicable)
• Form 26AS
• Form 15G or 15H
• TDS certificates
• Interest certificates, if any
• Investment Documents
• Documents of Loans on Houses or Assets purchased during the year
• Any other documents needed to support the claims

Form 16

Form 16 is a document provided by an employer to his employee certifying Tax Deducted at Source during a Financial Year from the payments made to him.

This form provides details of Gross Salary and perquisites like HRA, LTA, etc. It further contains information regarding other incomes reported by the employee and exemptions granted under certain clauses of the IT Act, net taxable income, and TDS deducted.

This serves as the major document for filing the ITR.

Form 16A, Form 16B, and Form 16C

• Forms 16a, 16b, and 16c deal with tax deducted from incomes other than salary.
• Form 16a provides details of tax deducted from income generated through securities, investments, FDRs, Rent, etc. These are provided by the respective agent deducting the TDS.
• Form 16b deals with tax deducted from earnings on the sale of immovable property or property dealings. The person buying the property should issue this certificate.
• Form 16c is a TDS certificate issued by a person paying rent to his land lord. It contains the amount of gross rent payable and the amount of TDS deducted while paying the rent to his owner. The amount so deducted by the payee is to be deposited to the Income Tax Department through challan within 15 days of the deduction.

Form 26AS

Form 26AS is a consolidated statement of TDS deducted from the taxpayer's remunerations during a year by different entities (like employer, banks, and other sources). Besides TDS, this form contains figures of Self-Assessment Tax, Advance Tax remittances, and certain other financial transactions done during the said year.

This Form is available to taxpayers on the Income Tax Department's portal. As and when remittances are done, the statement gets updated simultaneously. You can download the form and tally the figures with your records and, if any discrepancies, raise the issues for solution with the department.

This form plays a crucial role while filing your ITR return. You must verify the figures before filing of the ITR return.

Form 15G

Form 15G is a document certifying that the income of the person holding it falls within the non-taxable bracket. This form is issued to individuals aged 60 and below. The holder of this form can submit it to the concerned authority (banks, etc.) for not deducting TDS from any payments that he may be receiving from them.  

Form 15H

Form 15H is for senior citizens whose income falls within the non-taxable bracket. It serves a similar purpose to that of Form 15G.

Other Documents

Other forms and documents, such as PAN cards, salary slips, TDS certificates, loan documents, interest certificates, investment certificates, rent agreements, and property sale documents, must be kept in the taxpayer's records before filing the tax returns.  

These documents are essential for verifying the figures and for accurately filing the ITR. Additionally, they may be required if the Tax Department requests them.