I-T dept flags ‘high-risk’ cases of undisisclosed foreign assets; launches second NUDGE drive

The Income Tax department on Thursday said it has identified "high-risk" cases where foreign assets appear to exist but have not been reported in the income tax returns (ITRs) filed for Assessment Year (AY) 2025-26.

The Central Board of Direct Taxes (CBDT) will launch the second phase of its ‘NUDGE’ compliance campaign from November 28 to alert taxpayers about possible non-disclosure of foreign assets and income in their income-tax returns.

Under the campaign, the CBDT will issue SMS and email alerts to to about 25,000 individuals, advising them to review and revise their returns by December 31, 2025, to avoid penal consequences.

Big corporates whose employees have foreign assets and have not disclosed are also onboarded to sensitise taxpayers, reported PTI, citing people familiar with the matter.

Industry bodies, ICAI, and associations have also been reportedly requested to create awareness.

Complete disclosure of foreign income and assets is mandated under the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Last year, too, the department had sent SMS/emails to targeted select taxpayers who had been reported by foreign jurisdictions under the Automatic Exchange of Information (AEOI) framework as holding foreign assets that were not disclosed in their Income Tax Returns (ITRs) for AY 2024-25.

The CBDT said the campaign is part of its “PRUDENT” approach to tax administration, which emphasises professionalism, responsible conduct, due diligence, effective enforcement and technology-driven, non-intrusive compliance systems.

It added that advanced data analytics are being deployed to reduce information gaps, simplify compliance and strengthen a transparent and trust-based interface with taxpayers in line with the government’s “Viksit Bharat” vision.

The second NUDGE campaign builds on the first phase launched in November 2024, which targeted taxpayers reported by foreign jurisdictions under the AEOI framework for holding undisclosed offshore assets.

That exercise resulted in 24,678 taxpayers revisiting their returns and disclosing foreign assets worth ₹29,208 crore and foreign-source income of ₹1,089.88 crore, according to the statement.

"Analysis of AEOI information for FY 2024-25 (CY 2024) has identified high-risk cases where foreign assets appear to exist but have not been reported in the ITRs filed for AY 2025-26," the I-T department said in a statement.

India receives information on offshore financial holdings of its residents from partner jurisdictions under the Common Reporting Standard (CRS) and from the United States under FATCA, which helps the tax department identify discrepancies.

This information assists in identifying potential discrepancies and guiding taxpayers towards timely and accurate compliance, it added.

The campaign aims to facilitate correct reporting in Schedule Foreign Assets (FA) and Foreign Source Income (FSI) in ITRs.