Introduction
In a continuing effort to modernize tax administration through data-driven and taxpayer-centric measures, the Central Board of Direct Taxes (CBDT), under the Ministry of Finance, Government of India, has announced the launch of its second “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” initiative. This campaign underscores the CBDT’s commitment to fostering a transparent, trust-based, and technology-enabled compliance environment, specifically targeting the accurate disclosure of foreign assets by Indian residents.
Key Highlights
The second NUDGE campaign builds upon the success of its predecessor and utilizes the robust data received through international Automatic Exchange of Information (AEOI) frameworks to guide taxpayers toward full compliance. The crucial points are as follows:
Focus on Foreign Asset Disclosure: The campaign is specifically designed to address potential non-disclosure of foreign financial assets and foreign-source income as mandated by the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Data Source: The CBDT leverages information on foreign financial assets received from partner jurisdictions under the Common Reporting Standards (CRS) and from the United States under the Foreign Account Tax Compliance Act (FATCA).
Targeted Cases: Analysis of AEOI information for the Financial Year 2024-25 (Calendar Year 2024) has identified high-risk cases where the existence of foreign assets is apparent but has not been reported in the Income Tax Returns (ITRs) filed for Assessment Year (AY) 2025-26.
Campaign Mechanism and Timeline: Taxpayers in the high-risk category will receive SMS and email communications starting from November 28, 2025. These communications will advise taxpayers to review and revise their ITRs to ensure correct reporting in Schedule Foreign Assets (FA) and Schedule Foreign Source Income (FSI). The opportunity to review and revise returns is available on or before December 31, 2025, after which penal consequences may apply.
Success of the First Campaign: The initial NUDGE initiative, launched in November 2024, resulted in 24,678 taxpayers revising their returns. These revisions disclosed foreign assets worth ₹29,208 crore and foreign-source income of ₹1,089.88 crore, demonstrating the efficacy of this non-intrusive approach.
Administrative Philosophy: The initiative is part of the CBDT’s ‘PRUDENT’ approach, which uses advanced data analytics to simplify compliance, reduce information asymmetry, and align with the vision of Viksit Bharat (Developed India) by fostering accountability and voluntary compliance.
Conclusion
The launch of the second NUDGE campaign is a clear signal of the CBDT’s strategy to utilize global data exchange mechanisms and modern technology to enhance tax compliance. It serves as a crucial, time-bound opportunity for identified taxpayers to proactively rectify any omissions in their reporting of foreign assets and income, thereby avoiding potential future scrutiny and statutory penalties. Taxpayers are strongly advised to utilize this window to ensure complete and accurate compliance with all statutory reporting requirements by the specified deadline of December 31, 2025. Further guidance is available on the official website, www.incometax.gov.in
Expositor(s): Adv. Shreya Mishra
