NUDGE Campaign

Why in News?

Recently, the Income Tax Department’s data-driven NUDGE campaign has improved tax compliance, leading to Rs. 8,800 crores in additional tax.

• Aim – To encourage voluntary tax compliance through behavioural nudges using data analytics and digital communication instead of enforcement.
• NUDGE stands for Non-intrusive Usage of Data to Guide and Encourage.
• Launched in – NUDGE 1.0 – 2024
  • Focus – General compliance
• NUDGE 2.0 – 2025
  • Focus – Foreign assets and foreign income disclosure.
• Organised by – Income Tax Department under the Central Board of Direct Taxes (CBDT), Ministry of Finance.
• Key Highlights – Digital Nudges – Uses targeted emails, SMS, and e-verification.
• Target – Focus on high-risk ‘A category’ taxpayers with income above ₹12 lakh.
• Preventive Approach – Uses data analytics and behavioural insights to prompt voluntary compliance before enforcement action.
• SAKSHAM Framework – Structured tax nudging process. It includes,
  • S – Sankalan (Compilation of Data),
  • A – Anusandhan (Research and analytics),
  • K – Kriyanvyan (Identifying whom to nudge),
  • S – Sampark (Communicating to create awareness and guide behaviour),
  • H – Hastak (Handholding and facilitation, such as through FAQs),
  • A – Adhikaar (Allowing revision of returns to foster trust),
  • M – Mulyankan (Assessment).
• Significance – Generated crores of additional tax in two years.
• Outcome – 60% of 1.11 crore respondents were non-filers, showing behavioural impact.
• Error Reduction – Rs. 1,750 crore refund claims reduced.
• Trust Building – Promotes a collaborative, non-adversarial tax system.
  • Reduces the burden of mass scrutiny.

Reference

IE | NUDGE Campaign