CBDT NUDGE 2:
Over 25,000 taxpayers to receive alerts on foreign assets; Check details to avoid penalties
Nov 27, 2025
Synopsis
The CBDT has launched the second phase of its NUDGE initiative, sending SMS and email alerts to taxpayers with potential foreign asset and income reporting discrepancies. Starting November 28, 2025, taxpayers flagged via AEOI data analysis are urged to revise their returns by December 31, 2025, to avoid penalties.
The Central Board of Direct Taxes (CBDT) on Thursday announced the launch of the second phase of its NUDGE initiative, designed to strengthen voluntary compliance in the reporting of foreign assets and overseas income.
Beginning 28 November 2025, the department will start sending SMS and email alerts to taxpayers flagged through Automatic Exchange of Information (AEOI) data analysis for FY 2024-25. Those contacted will be advised to review and revise their Income Tax Returns for AY 2025-26 by 31 December 2025 to avoid penal consequences.
According to the Finance Ministry, advanced analytics applied to AEOI information have thrown up several high-risk cases. Around 25,000 taxpayers are expected to receive alerts in the first leg. These cases reportedly involve foreign holdings that may have been misreported or not declared at all.
CBDT confirmed that the campaign will widen from mid-December 2025, covering additional taxpayers to further improve the compliance ecosystem.
Awareness across corporates and professional bodies
The tax department is also working with large corporates to sensitise employees who could be holding undisclosed foreign assets but have not reflected them in their returns. Professional institutions including ICAI and industry associations have been requested to spread awareness on mandatory foreign asset reporting.
Heavy penalties for non-disclosure
Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, failure to disclose foreign assets can lead to a penalty of Rs 10 lakh, along with 30 per cent tax and a penalty of 300 per cent on the tax payable. CBT emphasised that enforcement is being taken seriously, noting that the Income Tax Department assessed around 1,080 cases and raised a demand of nearly Rs 40,000 crore till June 2025.
Recently, search operations in Delhi, Mumbai and Pune, triggered by Common Reporting Standard (CRS) inputs and spontaneous exchange of information, identified undisclosed foreign assets and income worth several hundreds of crores, particularly linked to investments in Dubai. CBDT reiterated that information received under CRS and FATCA frameworks is now being acted upon rigorously.
Accuracy in Schedule FA and FSI reporting
The campaign highlights the importance of filing accurate details in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income) under the Income-tax Act, 1961 and the Black Money Act. CBDT cautioned that cases where discrepancies remain after the NUDGE communication may be subject to further scrutiny or verification.
The first NUDGE initiative, launched on 17 November 2024, prompted 24,678 taxpayers to revisit their filings, leading to disclosures of Rs 29,208 crore in foreign assets and Rs 1,089.88 crore in foreign-source income based on AEOI triggers.
Reminder to taxpayers
India receives data on overseas financial holdings of residents from partner jurisdictions under the Common Reporting Standard (CRS) and from the United States through FATCA. This information helps authorities identify mismatches, pinpoint high-risk cases and encourage timely compliance.
CBDT has urged all eligible taxpayers to use this opportunity to make complete and accurate disclosures before enforcement measures come into play. Further information on CRS, FATCA and reporting norms under Schedules FA and FSI is available on the Income Tax Department’s official website.
Inputs from PTI
[The Economic Times]
