Table of Contents
- Foreign Income Not In Your Itr? Expect A Sharp Nudge Before December 31
- What Is Nudge 2.0?
- Cbdt Launches 2nd Nudge To Strengthen Compliance In Respect Of Foreign Assets
- What Is The Basic Objective Of Nudge 2.0 :
- Why Cbdt Has Started Analyzing & 2nd Nudge?
- Mandatory Reporting – Zero Threshold Rule Under nudge
- Who Will Receive Alerts Under Nudge? :
- What Taxpayers Should Do Before Dec 31 In nudge?
- Nudge Analysis For Ay 2024-25:
- Penalties For Non-compliance Of Nudge
Foreign Income Not in Your ITR? Expect a Sharp NUDGE Before December 31
What Is NUDGE 2.0?
The Income Tax Department has launched the enhanced NUDGE 2.0 campaign, aimed at identifying taxpayers who may have undisclosed foreign assets or overseas income in their AY 2025–26 ITRs. NUDGE (Non-intrusive Usage of Data to Guide and Enable) leverages global data-sharing systems to match foreign financial information with ITR disclosures.
The department uses information from AEOI/CRS partner jurisdictions, FATCA filings (US), & overseas financial institutions. Data covers foreign bank accounts, ESOPs, investments, insurance products, securities, property, and income.
CBDT launches 2nd NUDGE to strengthen compliance in respect of Foreign Assets
What is the basic objective of NUDGE 2.0 :
The objective of issue of The Central Board of Direct Taxes launches 2nd NUDGE (Non-intrusive Usage of Data to Guide and Enable) initiative to strengthen voluntary compliance in respect of Foreign Assets. The Central Board of Direct Taxes continues its data-driven, non-intrusive, taxpayer-centric measures to improve voluntary compliance. The initiative is not punitive. Its purpose is to Encourage transparency; Promote responsible tax behaviour; Strengthen self-compliance; Avoid unnecessary scrutiny through early correction.
Why CBDT has started analyzing & 2nd NUDGE?
The Central Board of Direct Taxes NUDGE 2.0 reflects a modern approach that is prudent, data-backed, and minimally intrusive, guiding taxpayers to stay compliant while reducing litigation. The Central Board of Direct Taxes adopts a PRUDENT approach using data analytics and AI to identify non-compliance and guide taxpayers. Eligible taxpayers can update their returns to ensure compliance
CBDT has started analysing Automatic Exchange of Information data for FY 2024–25. Based on this analysis, the department has identified taxpayers who may possess foreign assets or financial interests that were not disclosed in their AY 2025–26 Income Tax Returns.
Mandatory Reporting – Zero Threshold Rule under NUDGE
Every resident individual must report all foreign assets, regardless of the value of foreign bank accounts (peak & closing balance), value of ESOPs, equity holdings, mutual funds, insurance products, value of overseas properties & IP assets, value of dividends, interest, rent, capital gains from abroad & value of foreign income in Schedule FSI with TIN, DTAA article, and INR conversion via SBI TTBR rate.
The Central Board of Direct Taxes has rolled out NUDGE 2.0 (Non-intrusive Usage of Data to Guide and Enable), a proactive initiative aimed at improving voluntary tax compliance through data-driven and non-intrusive methods. The initiative is called NUDGE (Non-intrusive Usage of Data to Guide and Enable), focusing on accurate reporting and revenue mobilization.
Who Will Receive Alerts under NUDGE? :
Starting 28 November 2025, around 25,000 high-risk taxpayers will receive SMS and email nudges to review their filings. These alerts advise taxpayers to review and cross-verify their filed ITRs. Taxpayers are advised to revise or update their ITRs on or before 31 December 2025. A larger second phase will roll out in mid-December. Action Deadline is 31 December 2025 review and file a revised or updated return, if required.
The first NUDGE (Non-intrusive Usage of Data to Guide and Enable) campaign was launched on 17th November 2024, targeting taxpayers who had foreign assets reported under Automatic Exchange of Information (AEOI) but not disclosed in their Income Tax Returns for AY 2024-25 Last year (NUDGE 1.0) covered following:
- 24,678 taxpayers corrected returns
- INR 29,208 crore foreign assets newly disclosed
- INR 1,089.88 crore foreign income recognized
So. It covered 24,675 taxpayers, revisiting their returns and disclosing foreign assets amounting to INR 29,029 crore, with foreign-source income of INR 1,089.88 crore.
What Taxpayers Should Do Before Dec 31 in NUDGE?
- Re-check ITR, especially Schedule FA & Schedule FSI; Match foreign disclosures with bank/investment statements & File a revised return if the original ITR has errors; and If missed earlier, use Updated Return under ITR-U within 4 years
- Officials emphasize the purpose is preventive, not punitive, giving taxpayers a chance to rectify mistakes before enforcement actions begin.
- The Central Board of Direct Taxes uses information from the Common Reporting Standard, the Foreign Account Tax Compliance Act, partner jurisdictions, and the United States.
NUDGE Analysis for AY 2024-25:
Identified high-risk cases where foreign assets/income were not disclosed. The campaign aims to encourage voluntary compliance before 31st December 2025. Focus Areas is Schedule Foreign Assets, Schedule Foreign Source Income & under the Income Tax Act, 1961 and Black Money (Undisclosed Foreign Income and Assets) Act, 2015. More details are available on www.incometax.gov.in.
Penalties for Non-Compliance of NUDGE
- If discrepancies remain uncorrected, the department may initiate Penal proceedings; Assessment actions; Additional compliance requirements.
- Failing to correct discrepancies can lead to serious consequences: Under the Black Money Act: is 10 lakh penalty for non-disclosure (INR 20 lakh threshold from 1 Oct 2024 for non-real-estate foreign assets) & Imprisonment of 6 months to 7 years
- Under the Income-tax Act: Penalty up to 120% of tax + interest for concealment & Assessment proceedings and scrutiny
