CBDT Launches Second NUDGE Campaign to Correct Foreign Asset Reporting

Beginning 28 November 2025, CBDT will issue SMS and email alerts to these taxpayers, advising them to review, revise, and correct their returns by 31 December 2025.

The Central Board of Direct Taxes (CBDT) has launched the second phase of its NUDGE campaign to promote accurate reporting of foreign assets and foreign-source income by Indian taxpayers. Following an extensive analysis of Automatic Exchange of Information (AEOI) data received for FY 2024–25 (CY 2024), the CBDT identified a set of high-risk cases in which foreign assets appear to exist but have not been disclosed in the Income Tax Returns (ITRs) filed for AY 2025–26.

Beginning 28 November 2025, CBDT will issue SMS and email alerts to these taxpayers, advising them to review, revise, and correct their returns by 31 December 2025. The objective is to avoid penal consequences under Indian tax laws and ensure that taxpayers benefit from the window for voluntary compliance.

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Ensuring Accurate Disclosure Under Schedule FA and Schedule FSI

The NUDGE initiative is designed to encourage proper filing of information under:

• Schedule Foreign Assets (FA)

• Schedule Foreign Source Income (FSI)

These disclosures are mandatory under:

• the Income-tax Act, 1961, and

• the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Failure to report foreign assets can result in significant penalties, prosecution, and assessments under the stringent Black Money Act.

By nudging taxpayers early, the CBDT aims to improve compliance, reduce litigation, and reinforce trust-based governance.

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A PRUDENT Approach to Modern Tax Administration

Highlighting its commitment to an effective and citizen-friendly tax system, CBDT stated that the campaign is rooted in the PRUDENT approach:

• P – Professionalism

• R – Responsible & Responsive governance

• U – Understanding of laws, transactions and business realities

• D – Dedication & Due Diligence, with Data-driven decision-making

• E – Effective enforcement, balanced with empathy

• N – Non-intrusive administration, promoting compliance through nudges rather than coercion

• T – Technology-driven systems and processes

Using sophisticated data analytics, the Board seeks to reduce information asymmetry between taxpayers and the tax administration, simplify processes, and build a more transparent and trust-oriented compliance environment.

This approach is aligned with the national vision of Viksit Bharat, which emphasises accountability, transparency, digital governance, and voluntary compliance.

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First NUDGE Campaign Delivered Significant Compliance Gains

The first NUDGE campaign, launched on 17 November 2024, targeted taxpayers flagged through AEOI data for FY 2023–24 who had not disclosed their foreign holdings in ITRs for AY 2024–25.

The results were promising:

• 24,678 taxpayers reviewed and revised their returns

• Foreign assets worth ₹29,208 crore were voluntarily disclosed

• Additional foreign-source income of ₹1,089.88 crore was reported

CBDT noted that the success included disclosures by individuals not directly nudged, indicating a broad ripple effect and rising taxpayer awareness.

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Strengthening India’s International Tax Transparency Network

India receives foreign asset information from:

• Common Reporting Standards (CRS) partner jurisdictions, and

• the United States under the Foreign Account Tax Compliance Act (FATCA).

The information covers overseas bank accounts, insurance products, custodial accounts, investment entities, and other financial holdings linked to Indian residents.

AEOI data helps:

• detect tax evasion and undisclosed wealth,

• support voluntary disclosures,

• ensure accurate reporting, and

• strengthen India’s global reputation for compliance with international tax standards.

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Towards a Data-Driven, Non-Intrusive, and Taxpayer-Centric System

CBDT reaffirmed its commitment to a data-driven, non-intrusive, and taxpayer-friendly tax ecosystem. The “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” framework emphasises gentle prompts over enforcement-heavy interventions.

The Board aims to:

• increase voluntary compliance,

• protect taxpayers from unintended non-compliance,

• enhance the quality of tax data, and

• ensure efficient revenue mobilisation.

Through this modernised approach, CBDT seeks to build a future-ready tax administration that prioritises transparency, digital efficiency, and trust.

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Advisory to Taxpayers

The CBDT has urged all taxpayers who receive the communication to:

• Review their ITRs for AY 2025–26

• Verify disclosures in Schedule FA and Schedule FSI

• File a revised return before 31 December 2025

• Seek professional assistance if required

Taxpayers can refer to guidance materials, FAQs, and compliance guidelines on the official Income Tax portal: www.incometax.gov.in.

CBDT’s second NUDGE campaign marks a forward-looking step in India’s journey towards clean, transparent, and accountable tax governance, encouraging timely compliance while reducing disputes and strengthening confidence in the tax system.