Nudge Campaign Revolutionizes Tax Collection Efficiency

The Income Tax department's Nudge campaign has enhanced tax collection efficiency by utilizing technology-enabled compliance rather than post-facto enforcement. The initiative improved TDS filings, identified non-genuine agricultural income, and capital gains, reducing litigation and increasing revenue through voluntary compliance.

The Income Tax department's groundbreaking Nudge campaign has significantly enhanced tax collection efficiency, the Economic Survey revealed on Thursday. By shifting the focus from traditional enforcement to preventive, technology-driven compliance, the initiative marks a revolutionary change in revenue mobilization strategies.

Central to the campaign's success are data-driven nudges, which have led to improved third-party reporting and greater accuracy in Tax Deducted at Source (TDS) filings. The campaign's table in Parliament disclosed that over 8,500 deductors revised their TDS returns, resulting in the addition of more than 1.08 crore deductees and bringing an additional Rs 4,825 crore into the system.

Additionally, the campaign identified Rs 2,038.02 crore in non-genuine agricultural income and Rs 33,057.28 crore in capital gains through offers-for-sale by promoters during initial public offerings. By integrating data with behavioral insights and transparent communication, nudge-based tax administration signifies a modern, citizen-centric approach to revenue collection.