CBDT’s 2nd NUDGE for Foreign Asset Compliance

RR Team

4 weeks ago

The Central Board of Direct Taxes (CBDT) has launched the second edition of its Non-intrusive Usage of Data to Guide and Enable (NUDGE) initiative, aimed at promoting voluntary compliance among taxpayers holding foreign assets. Starting 28th November 2025, the CBDT will send SMSs and emails to identified taxpayers, advising them to review and revise their Income Tax Returns (ITRs) for the Assessment Year 2025-26 on or before 31st December 2025 to avoid penal consequences.

Targeting High-Risk Foreign Asset Cases

Analysis of Automatic Exchange of Information (AEOI) for FY 2024-25 (CY 2024) has helped CBDT identify high-risk cases where foreign assets may exist but remain undisclosed in filed ITRs. The campaign specifically targets these taxpayers to ensure correct reporting in Schedule Foreign Assets (FA) and Foreign Source Income (FSI).

Encouraging Transparent and Voluntary Compliance

CBDT’s 2nd NUDGE initiative builds on the success of the first campaign launched in November 2024. That exercise led 24,678 taxpayers to revise their returns, disclosing foreign assets worth ₹29,208 crore and foreign-source income of ₹1,089.88 crore. The campaign emphasises the statutory requirement of accurate reporting under the Income Tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

PRUDENT Approach to Tax Administration

CBDT’s approach, encapsulated in the acronym PRUDENT Professionalism, Responsible & Responsive, Understanding, Dedication, Effective enforcement, Non-intrusive administration, and Technology leverages advanced data analytics to simplify compliance processes, reduce information asymmetry, and enhance trust between taxpayers and the tax authority.

Data-Driven and Non-Intrusive Measures

Through NUDGE, CBDT aims to strengthen its data-driven and taxpayer-centric measures, fostering voluntary compliance while avoiding intrusive enforcement. The initiative utilises information obtained from partner jurisdictions under the Common Reporting Standard (CRS) and the United States under the Foreign Account Tax Compliance Act (FATCA) to identify discrepancies and guide taxpayers.

Call to Action for Taxpayers

Taxpayers who receive SMSs or emails under the 2nd NUDGE campaign are encouraged to review their returns and make necessary corrections before 31st December 2025. The CBDT emphasises that compliance not only avoids penalties but also aligns with India’s broader vision of Viksit Bharat, promoting accountability, transparency, and a culture of voluntary disclosure.