Income Tax Dept begins second NUDGE drive to spot undisclosed foreign assets; what taxpayers should do
In an update posted on X, the department said the latest round of communication is based on financial information shared by several jurisdictions under global data-exchange frameworks.
- Nov 28, 2025,
- Updated Nov 28, 2025 4:15 PM IST
The Income Tax Department has begun issuing text messages and emails to individuals who may have failed to disclose foreign assets in their income tax returns for the current assessment year. These alerts form part of the second phase of NUDGE, a Central Board of Direct Taxes (CBDT) initiative that promotes voluntary compliance through data-driven insights rather than enforcement-led action.
In an update posted on X, the department said the latest round of communication is based on financial information shared by several jurisdictions under global data-exchange frameworks. During the first phase of NUDGE, around 25,000 individuals were identified for potential mismatches between their overseas financial records and domestic filings, according to people familiar with the programme.
Why are the alerts being sent
India regularly receives detailed financial data of its residents from partner countries under the Automatic Exchange of Information (AEOI) framework, including the Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA). After analysing data for FY25 (calendar year 2024), authorities flagged cases where foreign assets or income appeared to exist but were not declared in returns filed for AY 2025-26.
CBDT said NUDGE is intended to be a non-intrusive mechanism that encourages taxpayers to correct omissions early. By issuing timely alerts and allowing taxpayers to voluntarily update their filings, the initiative aims to reduce the need for immediate scrutiny or enforcement.
CA (Dr.) Suresh Surana explained that the second phase—announced through CBDT’s press release dated 27 November 2025—builds upon data received under global transparency standards such as CRS and FATCA. The department uses these datasets to identify gaps between foreign financial holdings and their disclosure in income tax returns.
Instead of initiating assessments at the outset, the department is sending advisory emails and SMS messages prompting taxpayers to revisit their disclosures. “This second phase was triggered following analysis of the most recent AEOI dataset, which highlighted cases where foreign investments or income appeared to exist but were not reflected in the returns filed for the corresponding assessment year,” Surana said.
Communications from the department, issued from 28 November 2025, advise taxpayers to reassess their filings and submit revised returns, especially updating Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income)—by 31 December 2025. He added that taxpayers should also retain records such as foreign bank statements, investment confirmations, and overseas tax payment proofs.
What taxpayers should do
Individuals receiving such alerts must review their income tax returns for possible omissions and file a revised return if needed. Ignoring the communication can trigger action under the Income-tax Act and the Black Money (Undisclosed Foreign Income and Assets) Act. Penalties for non-disclosure are steep: a flat Rs 10 lakh penalty under the Black Money Act, tax at 30% on undisclosed foreign income, and an additional penalty of up to 300% of the tax due.
A similar exercise last year prompted 24,678 taxpayers to revise their filings, resulting in disclosures of foreign assets worth Rs 29,208 crore and foreign-source income of Rs 1,089.88 crore. Subsequent assessments have led to tax demands totalling around Rs 40,000 crore.
As part of its broader outreach, the department is collaborating with large corporates, professional bodies and industry associations to raise awareness, with an expanded second phase scheduled to begin in mid-December. CBDT said the initiative reflects its shift toward a more transparent, technology-driven and voluntary compliance-oriented tax administration framework.
Surana noted that the success of the first phase demonstrates how data-backed nudges can significantly boost compliance. The second phase, he said, is likely to deepen this behavioural shift, reinforcing India’s commitment to global tax transparency and responsible reporting of overseas financial interests.
The Income Tax Department has begun issuing text messages and emails to individuals who may have failed to disclose foreign assets in their income tax returns for the current assessment year. These alerts form part of the second phase of NUDGE, a Central Board of Direct Taxes (CBDT) initiative that promotes voluntary compliance through data-driven insights rather than enforcement-led action.
In an update posted on X, the department said the latest round of communication is based on financial information shared by several jurisdictions under global data-exchange frameworks. During the first phase of NUDGE, around 25,000 individuals were identified for potential mismatches between their overseas financial records and domestic filings, according to people familiar with the programme.
Why are the alerts being sent
India regularly receives detailed financial data of its residents from partner countries under the Automatic Exchange of Information (AEOI) framework, including the Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA). After analysing data for FY25 (calendar year 2024), authorities flagged cases where foreign assets or income appeared to exist but were not declared in returns filed for AY 2025-26.
CBDT said NUDGE is intended to be a non-intrusive mechanism that encourages taxpayers to correct omissions early. By issuing timely alerts and allowing taxpayers to voluntarily update their filings, the initiative aims to reduce the need for immediate scrutiny or enforcement.
CA (Dr.) Suresh Surana explained that the second phase—announced through CBDT’s press release dated 27 November 2025—builds upon data received under global transparency standards such as CRS and FATCA. The department uses these datasets to identify gaps between foreign financial holdings and their disclosure in income tax returns.
Instead of initiating assessments at the outset, the department is sending advisory emails and SMS messages prompting taxpayers to revisit their disclosures. “This second phase was triggered following analysis of the most recent AEOI dataset, which highlighted cases where foreign investments or income appeared to exist but were not reflected in the returns filed for the corresponding assessment year,” Surana said.
Communications from the department, issued from 28 November 2025, advise taxpayers to reassess their filings and submit revised returns, especially updating Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income)—by 31 December 2025. He added that taxpayers should also retain records such as foreign bank statements, investment confirmations, and overseas tax payment proofs.
What taxpayers should do
Individuals receiving such alerts must review their income tax returns for possible omissions and file a revised return if needed. Ignoring the communication can trigger action under the Income-tax Act and the Black Money (Undisclosed Foreign Income and Assets) Act. Penalties for non-disclosure are steep: a flat Rs 10 lakh penalty under the Black Money Act, tax at 30% on undisclosed foreign income, and an additional penalty of up to 300% of the tax due.
A similar exercise last year prompted 24,678 taxpayers to revise their filings, resulting in disclosures of foreign assets worth Rs 29,208 crore and foreign-source income of Rs 1,089.88 crore. Subsequent assessments have led to tax demands totalling around Rs 40,000 crore.
As part of its broader outreach, the department is collaborating with large corporates, professional bodies and industry associations to raise awareness, with an expanded second phase scheduled to begin in mid-December. CBDT said the initiative reflects its shift toward a more transparent, technology-driven and voluntary compliance-oriented tax administration framework.
Surana noted that the success of the first phase demonstrates how data-backed nudges can significantly boost compliance. The second phase, he said, is likely to deepen this behavioural shift, reinforcing India’s commitment to global tax transparency and responsible reporting of overseas financial interests.