CBDT Launches Second NUDGE Initiative to Enhance Voluntary Compliance on Foreign Assets

The Central Board of Direct Taxes (CBDT) has launched the second phase of its NUDGE initiative to promote voluntary compliance regarding foreign assets. Starting 28th November 2025, identified taxpayers will receive SMS and email alerts advising them to review and, if necessary, revise their Income Tax Returns (ITRs) by 31st December 2025 to avoid penalties.

Analysis of the Automatic Exchange of Information (AEOI) for FY 2024-25 (CY 2024) identified high-risk cases where taxpayers appear to hold foreign assets but have not reported them in their ITRs for AY 2025-26. The second NUDGE campaign aims to encourage accurate reporting of foreign assets in Schedule FA and foreign-source income in Schedule FSI, as mandated under the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Following a PRUDENT approach—Professionalism, Responsibility, Understanding, Dedication, Effective enforcement, Non-intrusive administration, and Technology—the CBDT uses advanced data analytics to simplify compliance, reduce information gaps, and foster a transparent, taxpayer-friendly system. This initiative supports the vision of Viksit Bharat, promoting accountability, transparency, and a culture of voluntary compliance.

CBDT Launches Second NUDGE Initiative to Enhance Voluntary Compliance (1)

The first NUDGE campaign, launched on 17th November 2024, led to 24,678 taxpayers revisiting their returns, disclosing foreign assets worth ₹29,208 crore and foreign-source income of ₹1,089.88 crore. Information from foreign jurisdictions under the Common Reporting Standards (CRS) and the U.S. FATCA framework enables the CBDT to detect discrepancies and guide taxpayers toward timely compliance.

Taxpayers are encouraged to use this opportunity to ensure full statutory compliance. For more details on CRS, FATCA, Schedule FA, and Schedule FSI, visit the official website: www.incometax.gov.in.

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Frequently Asked Questions (FAQs)

Q1. What is the Second NUDGE initiative by CBDT?

The Second NUDGE initiative is a voluntary compliance measure where CBDT sends SMSs and emails to taxpayers with foreign assets, advising them to review and revise their income tax returns (ITRs) to avoid penalties.

Q2. Who will receive the NUDGE messages?

Taxpayers identified as having high-risk cases of non-disclosure or incomplete disclosure of foreign assets in their ITRs will receive these notifications.

Q3. What is the timeline for compliance under this initiative?

The CBDT advises taxpayers to voluntarily review and revise their ITRs on or before 31st December 2025 to avoid penal consequences.

Q4. Is the NUDGE initiative a penalty or legal action?

No. This initiative is a polite warning aimed at encouraging voluntary compliance. However, failure to act may attract penalties and interest later.

Q5. How should taxpayers disclose foreign assets in their ITR?

Foreign assets must be reported in Schedule FA of the applicable ITR form, including both the foreign currency value and its equivalent in Indian Rupees using the Telegraphic Transfer Buying Rate (TTBR).

Q6. What happens if I fail to comply after receiving a NUDGE?

Non-compliance may lead to penalties up to ₹10 lakh and/or imprisonment of up to 7 years under the Income Tax Act.

Q7. Which ITR forms are applicable for foreign asset disclosure?

ITR-2: For individuals and HUFs not having income from business or profession.
ITR-3: For individuals and HUFs having income from business or profession along with foreign assets.

Q8. Can I file a revised return even if I have already filed one?

Yes, taxpayers can file a revised ITR to correctly disclose foreign assets and income before the deadline specified in the NUDGE message. CBDT Launches Second NUDGE Initiative.