The Central Board of Direct Taxes (CBDT) has launched the Second Phase of the “NUDGE” Campaign (from 28 November 2025) to encourage accurate and voluntary disclosure of foreign assets and foreign-sourced income in Income Tax Returns (ITR) for AY 2025-26.
Through global data-sharing systems like OECD CRS and FATCA, CBDT is identifying taxpayers with potential mismatches between their foreign financial information and their ITR filings. Affected taxpayers are receiving SMS and email alerts to review and, if necessary, revise their returns.
Important Deadline
Last date to revise ITR for AY 2025-26: 31 December 2025
Why This Matters
Non-disclosure of foreign assets can attract severe consequences under:
- Income-tax Act, 1961
- Black Money (Undisclosed Foreign Income & Assets) Act, 2015
Possible consequences include:
- ₹10 lakh penalty per year for non-disclosure
- Prosecution (up to 7 years in serious cases)
- Reassessment and detailed scrutiny
- Rejection of DTAA and Foreign Tax Credit (FTC) claims
With India exchanging financial data with over 100 countries, detection risk is significantly higher than before.
Who Should Act Now?
This is especially relevant for:
- Returning NRIs & RNORs
- Residents (ROR) holding foreign assets
- Individuals with:
- Overseas bank or brokerage accounts
- RSUs/ESOPs from foreign employers
- 401(k), Roth IRA, or foreign pensions
- Foreign mutual funds, ETFs, or shares
- Overseas immovable property
- Foreign crypto/digital assets
- Taxpayers claiming DTAA or Foreign Tax Credit
Foreign Asset Disclosure is Mandatory
Taxpayers must disclose:
- Foreign bank accounts (even dormant)
- Overseas brokerage accounts
- Retirement accounts (401(k), Roth IRA, pensions)
- RSUs/ESOPs
- Foreign investments and properties
Non-disclosure itself can trigger penalties, even if no tax is due.
Section 89A – Relief for Retirement Accounts
Section 89A allows deferral of Indian tax on specified foreign retirement accounts (like 401(k) and employer pensions), but only if proper disclosure and filings are completed correctly.
Why Tax Notices Are Increasing
Indian authorities now receive automatic financial data from the USA, UK, Canada, Australia, UAE, and EU countries. If this data does not match your ITR, you may receive notices under:
- Section 131(1A) – Summons
- Section 148 – Income Escaping Assessment
- Section 133(6) – Seeking Information
- Section 142(1) – Inquiry Before Assessment
What You Should Do Now
- Review all overseas assets as on 31 March 2025
- Verify disclosures in Schedule FA, Schedule FSI, and Form 67
- Ensure correct reporting of foreign income and capital gains
- File a revised ITR before 31 December 2025
- Maintain proper documentation
- Seek expert guidance if required
How R. Tulsian & Co. LLP Can Help
R. Tulsian & Co. LLP assists NRIs and returning NRIs with:
- Foreign asset disclosure & Schedule FA preparation
- Revised ITR filing and NUDGE response
- DTAA and Foreign Tax Credit (Form 67) support
- CRS-FATCA data reconciliation
- RNOR/ROR tax planning
- Capital gains reporting on foreign investments
- Overseas property sale and repatriation (Form 15CA/CB)
- Handling Income Tax notices under Sections 131(1A), 148, 133(6), and 142(1)
Frequently Asked Questions
1. What is the CBDT NUDGE Campaign?
A compliance initiative encouraging accurate voluntary reporting of foreign assets and income.
2. Who receives NUDGE alerts?
Taxpayers whose ITR data does not match CRS/FATCA information.
3. Do NRIs need to report foreign assets?
NRIs generally do not file Schedule FA unless they become Resident or RNOR.
4. What happens if foreign assets are not disclosed?
Heavy penalties and possible prosecution under the Black Money Act.
5. Can past years be reopened?
Yes, under Section 148 if income is believed to have escaped assessment.
Conclusion
With global data sharing and AI-driven analytics, undisclosed foreign income is no longer hidden. Early compliance reduces risk; delay increases exposure.
If you need assistance with ITR revision, foreign asset disclosure, or handling tax notices, R. Tulsian & Co. LLP is here to support you.
For expert guidance on cross-border taxation, visit www.rtulsian.com or reach out to us on ishan@rtulsian.com or WhatsApp us on +91 6289107303 for a personalized consultation and seamless tax compliance solutions.
