Intensifying its efforts to curb tax evasion, the Central Board of Direct Taxes (CBDT) has launched the second phase of its “NUDGE” initiative to strengthen voluntary compliance by taxpayers on foreign assets and income. The exercise will begin with around 25,000 high-risk cases identified through Automatic Exchange of Information (AEOI) data for 2024-25.
From November 28, 2025, SMS and email alerts will be sent to the flagged taxpayers, advising them to review and revise their income tax returns (ITRs) for the assessment year 2025-26 by December 31, 2025. Non-compliance may invite severe penalties under the Income-tax Act and the Black Money Act, the tax department said.
Data-Driven Enforcement
The first phase of the exercise will focus on the highest-risk cases, while a second phase starting mid-December will expand the NUDGE campaign to cover additional taxpayers. Large corporates are also being brought on board to sensitise employees, who may have foreign assets that remain undisclosed in their returns.
The new initiative follows the first NUDGE campaign launched in November 2024, which led nearly 25,000 taxpayers to revise their returns and disclose over Rs 29,000 crore in foreign assets.
This time around, the Department has additionally sought support from industry bodies, the Institute of Chartered Accountants of India and professional associations, to raise awareness about mandatory reporting in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income), emphasising that non-disclosure attracts stringent consequences.
Under the Black Money (Undisclosed Foreign Income and Assets) Act, failure to report foreign assets can lead to a penalty of Rs 10 lakh, 30% tax on undisclosed income, and a penalty of 300% of the tax payable.
The CBDT highlighted that it is taking information received under global frameworks such as Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA) very seriously. Till June 2025, the Department had already assessed around 1,080 cases, raising tax demands of approximately Rs 40,000 crore, sources said.
Strict Penalties and Broadening the Compliance Outreach
Searches conducted in Delhi, Mumbai and Pune on the basis of CRS and spontaneous information—particularly relating to Dubai investments—resulted in the detection of several hundred crores worth of undisclosed foreign assets and income, sources said.
Officials indicated that after the NUDGE outreach, non-compliant cases may be taken up for scrutiny and further verification, reinforcing the campaign’s objective of promoting timely, accurate and voluntary reporting.
Th eCBDT has urged all taxpayers who receive notifications to take corrective action within the stipulated timeline and ensure full compliance.