CBDT to nudge 25K high-risk taxpayers to disclose foreign assets

Move aims to nudge 25,000 taxpayers to disclose foreign assets and income

The Income Tax Department will send compliance reminders to about 25,000 high-risk taxpayers as part of its campaign to voluntarily nudge them to disclose foreign assets and income, beginning November 28, according to sources in the Central Board of Direct Taxes (CBDT).

 

The 'NUDGE' (Non-intrusive Usage of Data to Guide and Enable) campaign, launched last year, targets residents who may not have fully disclosed their foreign assets or income, based on the analysis of the Automatic Exchange of Information (AEIO) data for financial year 2024-25 (calendar year 2024).

 

As part of the campaign, such taxpayers will be advised to review and revise their income tax returns (ITR) on or before December 31, 2025 to avoid penalties. They will receive the reminders via SMS and emails.

 

According to the CBDT clarification, for assessment year 2025-26, the calendar year ending on December 31 refers to the period from January 1, 2024 to December 31, 2024 in respect of foreign assets or accounts.

 

A wider second phase will roll out from mid-December, covering more individuals flagged for potential non-compliance.

 

“Big corporates whose employees have foreign assets and have not disclosed are also being on-boarded to sensitise taxpayers. Industry bodies, Institute of Chartered Accountants of India (ICAI) and associations have also been requested to create awareness,” the source said.

 

According to a CBDT source, non-compliance may lead to stringent penalties. Failure to disclose foreign assets can attract a penalty of ₹1 million, in addition to 30 per cent tax and a 300 per cent penalty on the tax payable under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015.

 

The department has already assessed around 1,080 cases, raising tax demands of nearly ₹40,000 crore till June 2025. Searches based on Common Reporting Standard (CRS) data and spontaneous information—particularly relating to Dubai investments—were conducted in Delhi, Mumbai and Pune, unearthing several hundred crore worth of undisclosed assets and income.

 

“The department is taking information received from CRS and Foreign Account Tax Compliance Act (FATCA) information very seriously. After NUDGE, non-compliant cases may be taken up for further scrutiny and verification” CBDT source said.

 

Under CRS and FATCA, India receives detailed account-level data annually of its residents from foreign jurisdictions, including account holder's name, address, tax identification number (TIN), account number and balance, and income details such as interest, dividend and other financial proceeds.

 

According to CBDT, the taxpayers must declare a wide range of foreign interests—bank and depository accounts, equity and debt holdings, insurance contracts, immovable property, financial interests in entities abroad, signing authority over foreign accounts, and any other foreign-source income.

 

Even if disclosures are made in Schedule FA (foreign assets) of the income tax return, taxpayers must also report such assets in Schedule AL (assets and liabilities) wherever applicable. CBDT has reiterated that revised returns filed before December 31 will be treated as voluntary correction.

 

The latest outreach builds on the first NUDGE campaign launched on November 17, 2024, when 24,678 taxpayers - nudged and non-nudged both - revised returns for AY 2024-25 to declare foreign assets worth ₹29,208 crore and foreign-source income of ₹1,089.88 crore, according to the government release.

 

“The current NUDGE offers a valuable window for voluntary correction. Once this closes, non-compliant cases may face deeper scrutiny. Genuine taxpayers should use this opportunity to align their filings, as global information exchange has made concealment both traceable and untenable,” said Abhishek A Rastogi, founder of Rastogi Chambers. He further noted that bona fide taxpayers must exercise caution by reconciling foreign bank accounts, investment statements, employee stock option plan (ESOP) related holdings, overseas property records, and any income received abroad with their ITR disclosures. Any mismatch, even if inadvertent, should be proactively rectified.

 

“A clear paper trail, timely clarifications and cooperative engagement with the authorities will ensure that genuine cases are closed swiftly without escalation to scrutiny,” added Rastogi.