Overwhelming ITR Backlog
As of February 4, 2026, a substantial volume of income tax returns for Assessment Year 2025-26 remains unprocessed for an extended period, exceeding 90
days. Data revealed that out of approximately 8.80 crore income tax returns filed, a staggering 24.64 lakh returns are caught in this processing backlog. This situation was brought to light when the Minister of State for Finance, Pankaj Chaudhary, responded to queries in Parliament on a Tuesday. Specifically, in response to the number of returns pending processing beyond the 90-day threshold as of January 31, 2026, the Minister confirmed the figure of 24,64,044. This indicates a significant operational challenge within the income tax department, impacting a considerable portion of taxpayers who have diligently filed their returns within the stipulated deadlines. The sheer scale of this backlog underscores the need for enhanced efficiency and resource allocation within the tax processing infrastructure to ensure timely assessment and resolution of taxpayer obligations.
NUDGE Campaign Success
Despite the processing challenges, the government's NUDGE campaign has demonstrated considerable success in encouraging voluntary compliance and generating revenue. Over the past two years, this initiative has spurred the filing of 1.11 crore updated or revised income tax returns. This proactive engagement has resulted in taxpayers voluntarily paying an additional Rs 6,976.50 crore in taxes. Furthermore, the campaign has indirectly influenced refund claims, with a reduction or additional tax payment of Rs 1,834 crore noted in December 2025. The cumulative revenue impact attributed to the NUDGE campaign is impressive, reaching a total of Rs 8,810.59 crore. The campaign's strategy involves identifying taxpayers who may have underreported income or claimed incorrect deductions and then communicating with them to review and amend their filings, thereby fostering a more accurate and compliant tax ecosystem.
Targeting Non-Filers
A key focus of the NUDGE campaign has been to bring first-time taxpayers and non-filers into the tax net, many of whom became aware of their obligations through media outreach or direct communication. Minister Chaudhary highlighted that a substantial percentage of individuals who filed updated returns were either new to filing or had previously not filed. The NUDGE, which stands for Non-Intrusive Usage of Data to Guide and Enable, operates by leveraging advanced risk analysis to pinpoint taxpayers who may not have accurately reported their assets or income, or who have made excessive claims for deductions or exemptions. The communication is carefully directed towards these select individuals, prompting them to re-examine their tax filings. Specific areas of concern often include undisclosed foreign assets or income, as well as incorrect claims under sections like 80G, 80GGC, or 80E, or unwarranted exemptions, thus aiming to rectify discrepancies and enhance tax compliance across a broader spectrum of the population.
