Indian residents with undisclosed foreign assets under scanner: Tax Dept launches NUDGE 2.0 campaign

Beginning 28 November 2025, CBDT will start issuing SMS and email alerts to taxpayers whose data indicates possible underreporting or non-reporting of foreign assets. The message is to review your filings, make corrections if needed, and complete the process by 31 December 2025 to avoid potential penalties.

Prior to this, the first NUDGE campaign was launched on 17 November 2024. Around 24,678 taxpayers revisited their returns, including several not directly contacted after the campaign. Disclosed foreign assets amounted to Rs 29,208 crore, with foreign-source income of Rs 1,089.88 crore.

The main aim of the NUDGE campaign is to improve disclosures in the Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income) sections of the ITR. Reporting these details is mandatory under the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Failure to comply can attract significant penalties.

Sandeep Speaking about the NUDGE 2.0 campaign, Bhalla , Partner, Dhruva Advisors, describes that as part of the government’s NUDGE 2.0 compliance initiative, information received through global information-exchange partners and the Criminal Investigation Unit is expected to be increasingly shared with taxpayers.

“Even taxpayers who do not receive a formal NUDGE communication—but are conscious of past under-reporting—are implicitly encouraged to carefully reconcile their Schedule FA/FSI disclosures with the AIS/AEOI data, and, where permissible, correct past filings and proactively regularise their tax positions. The same data is likely to form the foundation for future scrutiny, reassessment, and potential BMA action if discrepancies persist,” says Bhalla.

Sandeep Bhalla, Partner, Dhruva Advisors, says Undisclosed Foreign Income (UFI) broadly encompasses any foreign-sourced income not reported in a return filed within the timelines prescribed under Section 139(1)/(4)/(5) of the Income tax Act. “UFA refers to any offshore asset—directly held or beneficially owned—where the assessee is unable to satisfactorily explain the source of acquisition. This includes all categories of overseas holdings: bank accounts, securities, ESOPs/RSUs, foreign insurance products, immovable property, and interests in foreign entities,” says Bhalla.

Bhalla says that for Indian residents, accurate and complete disclosure in Schedule FA/FSI of the ITR is mandatory.

“Any lapse invites a penalty of Rs.10 lakh under the BMA, in addition to potential 120% tax and penalty exposure on the underlying UFI/UFA,” Bhalla explains.