New Delhi [India], November 27 : The Central Board of Direct Taxes (CBDT) on Thursday announced the launch of the second phase of its NUDGE initiative, aimed at strengthening voluntary compliance in the reporting of foreign assets and income.
As part of this phase, the CBDT will begin issuing SMS and email alerts from November 28, 2025, to taxpayers identified through Automatic Exchange of Information (AEOI) analysis for FY 2024-25. These alerts will advise taxpayers to review and revise their Income Tax Returns (ITRs) for AY 2025-26 by December 31, 2025, to avoid penal consequences.
According to the Finance Ministry, advanced data analytics of AEOI information has flagged several high-risk cases, and an initial set of about 25,000 such cases will be targeted in the first phase. The Department confirmed that these cases appear to involve foreign assets that have either been misreported or left undisclosed.
CBDT added that from mid-December 2025, the campaign will be expanded in a second phase to cover additional taxpayers in order to improve the overall compliance ecosystem.
The NUDGE initiative also includes coordinated efforts to sensitise employees of large corporates, especially where individuals may hold undisclosed foreign assets, but have not reported them in their returns. Industry bodies, ICAI and various professional associations have also been requested to participate in creating wider awareness on statutory foreign asset reporting.
Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, non-disclosure of foreign assets attracts a penalty of Rs 10 lakh, in addition to a 30 per cent tax and a 300 per cent penalty on the tax payable. CBDT highlighted that the seriousness of enforcement is reflected in the Income Tax Department having assessed around 1,080 cases, raising a demand of approximately Rs 40,000 crore till June 2025.
In recent months, the Department has also carried out search operations in Delhi, Mumbai and Pune, based on inputs from CRS and spontaneous exchange of information, particularly on investments linked to Dubai. These actions have unearthed undisclosed foreign assets and income worth several hundreds of crores. CBDT reiterated that information received under the CRS/FATCA framework is being taken very seriously, and the NUDGE exercise is intended to give taxpayers a fair opportunity to correct discrepancies before enforcement is initiated.
The campaign emphasises accurate reporting in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income), which is mandatory under the Income-tax Act, 1961, and the Black Money Act. CBDT noted that non-compliant cases may be taken up for further scrutiny and verification if discrepancies persist after the NUDGE communication.
The first NUDGE campaign, launched on November 17, 2024, saw 24,678 taxpayers revisit their returns, resulting in disclosures of Rs 29,208 crore in foreign assets and Rs 1,089.88 crore in foreign-source income based on AEOI triggers.
India receives information on overseas financial holdings of residents under the Common Reporting Standard (CRS) from partner jurisdictions and under FATCA from the United States. This information enables the Department to detect mismatches, identify high-risk cases and guide taxpayers toward timely compliance.
CBDT has urged all eligible taxpayers to make full use of this opportunity to comply with statutory foreign asset reporting norms. Additional details on CRS, FATCA and reporting requirements under Schedules FA and FSI are available on the Income Tax Department's official website.