CBDT Launches Second Phase of NUDGE Initiative to Boost Foreign Asset Disclosure

The Central Board of Direct Taxes (CBDT) has rolled out the second phase of its NUDGE initiative to strengthen voluntary compliance related to the disclosure of foreign assets and income. Starting November 28, SMS and email alerts will be sent to identified taxpayers, urging them to review and revise their Income Tax Returns (ITRs) for AY 2025–26 by December 31, 2025, to avoid penalties.

• Analysis of AEOI Data Flags High-Risk Cases
The initiative follows an assessment of Automatic Exchange of Information (AEOI) data for FY 2024–25, which identified multiple high-risk cases where taxpayers appeared to hold unreported foreign assets.

• Focus on Accurate FA and FSI Disclosures
The campaign aims to improve accuracy of reporting in Schedule Foreign Assets (FA) and Schedule Foreign Source Income (FSI), both mandatory under the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) & Imposition of Tax Act, 2015.

• Part of CBDT’s ‘PRUDENT’ Governance Approach
CBDT stated that the NUDGE initiative aligns with its PRUDENT model of tax administration:

• P – Professionalism
• R – Responsible and responsive
• U – Understanding transactions and businesses
• D – Dedication and due diligence
• E – Effective enforcement
• N – Non-intrusive administration
• T – Technology-based tax administration

Source: DD News