The Income Tax Department has launched a major crackdown on taxpayers claiming fraudulent deductions for donations to Registered Unrecognised Political Parties (RUPPs) and fake charitable trusts. According to the Central Board of Direct Taxes (CBDT), a "Nudge" campaign is now active, sending SMS and email alerts to thousands of taxpayers who claimed suspicious deductions under Section 80GGC and Section 80G. Ignoring this warning could lead to penalties of up to 200% of the tax evaded.
Why Are You Receiving a "Nudge" Email?
You may receive an alert if the Income Tax Department's AI-driven risk profiling identifies a mismatch in your return. Specifically, the department is targeting claims made for donations to political parties (RUPPs) that are often used as conduits for money laundering.
According to official reports from December 13, 2025, investigations revealed that many of these political parties were:
- Non-operational: Functioning only on paper with no actual political activity.
- Commission-based: Returning cash to donors after deducting a "commission" fee (Hawala).
- Fake Receipts: Issuing bogus receipts solely to help taxpayers lower their tax liability.
How to Check if Your Deduction is Valid
If you claimed a deduction under Section 80GGC (political donations) or Section 80G (charity), verify your records immediately. A valid claim must meet these criteria:
- Digital Payment: The donation must be made via cheque, draft, or electronic transfer. Cash donations are not eligible for Section 80GGC.
- Active Registration: The political party must be registered under Section 29A of the Representation of the People Act.
- Traceable Transaction: You must possess a formal receipt containing the PAN and registration number of the party.
3 Steps to Take if You Received a Notice
The CBDT's "Nudge" campaign is a taxpayer-friendly measure designed to let you correct mistakes voluntarily without facing prosecution.
1. Review Your ITR
Log in to the e-filing portal. Check your deductions under Chapter VI-A. If you paid a commission to an agent to get a tax refund, this is likely a fraudulent claim.
2. File an Updated Return (ITR-U)
If your claim was incorrect, you can file an Updated Return (ITR-U). You will need to pay the additional tax due plus interest. This option is available for the current Assessment Year (2025-26) and previous years.
3. Verify Contact Details
Ensure your email ID and mobile number are updated on the Income Tax portal. The department uses these channels to send the "Nudge" advisory. Missing this communication could result in a formal scrutiny notice later.
See More: ITR Refund Delay in 2025: Complete Guide to Reasons, Status Check & Quick Solutions
The Bottom Line
The Income Tax Department is using advanced data analytics to catch tax evasion. If you have claimed a bogus deduction for a political donation, use this window to file an updated return immediately. Voluntary compliance now prevents severe legal action later.
See also: How to fill ITR-U
