Foreign income not in your ITR? Expect a sharp NUDGE from the taxman before December 31
The campaign, formally known as “Non-intrusive Usage of Data to Guide and Enable (NUDGE)”, uses foreign financial information obtained through global data-exchange frameworks to identify mismatches between disclosures made in ITRs and data available with the tax authorities.
- Nov 29, 2025,
- Updated Nov 29, 2025 5:30 PM IST
The Income Tax Department will begin sending compliance “nudges” to around 25,000 high-risk taxpayers from Friday, targeting individuals who have failed to correctly disclose their foreign assets and overseas incomes in their Income Tax Returns (ITRs) for the assessment year 2025-26. According to officials, the outreach forms the first wave of the enhanced NUDGE 2.0 campaign — a data-driven initiative aimed at improving voluntary compliance without resorting to intrusive enforcement.
The campaign, formally known as “Non-intrusive Usage of Data to Guide and Enable (NUDGE)”, uses foreign financial information obtained through global data-exchange frameworks to identify mismatches between disclosures made in ITRs and data available with the tax authorities. Messages will go out via SMS and e-mail starting November 28, and taxpayers will be asked to review and revise their returns by December 31, failing which penal action may follow. A second and larger phase of nudges will roll out in mid-December.
Tax advisory platform TaxBuddy warned taxpayers that the communication drive is expected to be “significant and widespread,” urging individuals to cross-check their foreign disclosures. The platform highlighted steep consequences of non-compliance, including penalties of Rs 10 lakh under the Black Money Act and up to 120% of tax plus interest for concealment-related violations. “Last time, over 24,678 taxpayers had to pay taxes on undisclosed foreign income of Rs 1,090 crore,” the advisory noted.
What happened during NUDGE 1.0
The first NUDGE campaign conducted in November 2024 revealed massive underreporting. According to CBDT’s internal summary:
24,678 taxpayers revisited and corrected their returns,
Rs 29,208 crore worth of foreign assets were newly disclosed, and
Rs 1,089.88 crore of foreign income was reported.
Officials said the results validated the department’s approach of using analytics, data integration, and behavioural nudges instead of aggressive enforcement.
Why NUDGE 2.0 matters
Fresh global financial data received under Automatic Exchange of Information (AEOI) for FY 2024-25 has flagged thousands of high-risk cases. These include mismatches in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income), undeclared foreign bank accounts, ESOPs, overseas investments, and foreign property holdings. The discrepancies relate to ITR filings for AY 2025-26.
CBDT receives foreign financial information from:
CRS partner jurisdictions,
US FATCA filings, and
Overseas financial institutions, covering bank accounts, insurance products, mutual funds, brokerage accounts, equity holdings, and more.
What taxpayers must report
Experts reiterated that India follows a zero-threshold reporting rule for foreign assets: all overseas holdings must be declared, regardless of value. Individuals must disclose:
Peak and closing balances of foreign accounts,
Overseas investments, ESOPs, or partnership interests,
Foreign real estate and intellectual property,
Dividends, interest, rental income, and capital gains earned abroad.
Foreign income must be declared in Schedule FSI, along with the country, the relevant Taxpayer Identification Number (TIN), the DTAA article used for tax relief, and conversion to INR via the SBI TTBR rate.
Penalties for non-disclosure
Under the Black Money (Undisclosed Foreign Income and Assets) Act, failing to report foreign assets may lead to:
A Rs 10 lakh penalty (with a Rs 20 lakh reporting threshold for non-real estate assets from Oct 1, 2024), and
Imprisonment from six months to seven years.
Action Required Before December 31
Tax authorities are advising individuals to use the window available to:
File a revised return if the original ITR contained a mistake, or
File an updated return within four years to reduce future penalty exposure.
Officials said the intent is not punitive but preventive: “Taxpayers must correct errors now. NUDGE is designed to enable compliance before harsher actions become necessary.
The Income Tax Department will begin sending compliance “nudges” to around 25,000 high-risk taxpayers from Friday, targeting individuals who have failed to correctly disclose their foreign assets and overseas incomes in their Income Tax Returns (ITRs) for the assessment year 2025-26. According to officials, the outreach forms the first wave of the enhanced NUDGE 2.0 campaign — a data-driven initiative aimed at improving voluntary compliance without resorting to intrusive enforcement.
The campaign, formally known as “Non-intrusive Usage of Data to Guide and Enable (NUDGE)”, uses foreign financial information obtained through global data-exchange frameworks to identify mismatches between disclosures made in ITRs and data available with the tax authorities. Messages will go out via SMS and e-mail starting November 28, and taxpayers will be asked to review and revise their returns by December 31, failing which penal action may follow. A second and larger phase of nudges will roll out in mid-December.
Tax advisory platform TaxBuddy warned taxpayers that the communication drive is expected to be “significant and widespread,” urging individuals to cross-check their foreign disclosures. The platform highlighted steep consequences of non-compliance, including penalties of Rs 10 lakh under the Black Money Act and up to 120% of tax plus interest for concealment-related violations. “Last time, over 24,678 taxpayers had to pay taxes on undisclosed foreign income of Rs 1,090 crore,” the advisory noted.
What happened during NUDGE 1.0
The first NUDGE campaign conducted in November 2024 revealed massive underreporting. According to CBDT’s internal summary:
24,678 taxpayers revisited and corrected their returns,
Rs 29,208 crore worth of foreign assets were newly disclosed, and
Rs 1,089.88 crore of foreign income was reported.
Officials said the results validated the department’s approach of using analytics, data integration, and behavioural nudges instead of aggressive enforcement.
Why NUDGE 2.0 matters
Fresh global financial data received under Automatic Exchange of Information (AEOI) for FY 2024-25 has flagged thousands of high-risk cases. These include mismatches in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income), undeclared foreign bank accounts, ESOPs, overseas investments, and foreign property holdings. The discrepancies relate to ITR filings for AY 2025-26.
CBDT receives foreign financial information from:
CRS partner jurisdictions,
US FATCA filings, and
Overseas financial institutions, covering bank accounts, insurance products, mutual funds, brokerage accounts, equity holdings, and more.
What taxpayers must report
Experts reiterated that India follows a zero-threshold reporting rule for foreign assets: all overseas holdings must be declared, regardless of value. Individuals must disclose:
Peak and closing balances of foreign accounts,
Overseas investments, ESOPs, or partnership interests,
Foreign real estate and intellectual property,
Dividends, interest, rental income, and capital gains earned abroad.
Foreign income must be declared in Schedule FSI, along with the country, the relevant Taxpayer Identification Number (TIN), the DTAA article used for tax relief, and conversion to INR via the SBI TTBR rate.
Penalties for non-disclosure
Under the Black Money (Undisclosed Foreign Income and Assets) Act, failing to report foreign assets may lead to:
A Rs 10 lakh penalty (with a Rs 20 lakh reporting threshold for non-real estate assets from Oct 1, 2024), and
Imprisonment from six months to seven years.
Action Required Before December 31
Tax authorities are advising individuals to use the window available to:
File a revised return if the original ITR contained a mistake, or
File an updated return within four years to reduce future penalty exposure.
Officials said the intent is not punitive but preventive: “Taxpayers must correct errors now. NUDGE is designed to enable compliance before harsher actions become necessary.