The Central Board of Direct Taxes (CBDT) has rolled out its 2nd NUDGE initiative, aimed at improving voluntary compliance in reporting foreign assets and foreign-source income by Indian residents. In recent years, India has strengthened its information-sharing network with other countries using global frameworks such as the Common Reporting Standard (CRS) and FATCA. Through these automated exchanges, the Income Tax Department receives detailed financial information of Indian residents who hold assets or earn income abroad. Please check the latest Declaration of Foreign Assets and Income.
Based on this data, CBDT has identified a set of taxpayers who appear to own foreign assets that are not correctly declared in their Income Tax Returns (ITRs) for the Assessment Year 2025–26. Beginning 28 November 2025, such individuals may receive SMS or email alerts encouraging them to review their tax filings and rectify any omissions. This outreach is not a notice or scrutiny proceeding—it is a proactive nudge allowing taxpayers to correct mistakes before they escalate into compliance issues.
Why CBDT’s 2nd NUDGE Matters?
Foreign asset reporting is a sensitive area under Indian tax laws, especially with the introduction of the Black Money (Undisclosed Foreign Income and Assets) Act, 2015. Failure to disclose foreign assets may attract tax liability, interest, and penalties under the Income-tax Act. In cases of deliberate concealment — provisions under the Black Money (Undisclosed Foreign Income and Assets) and related penal provisions.
The 2nd NUDGE initiative specifically asks taxpayers to re-examine their disclosures in:
- Schedule FA (Foreign Assets)
- Schedule FSI (Foreign Source Income)
These schedules are mandatory for residents who hold assets or earn income outside India. Taxpayers must report dormant accounts or assets that do not generate income.
Who Should Take Action?
You should carefully review your tax filings if you currently hold or have previously held any of the following outside India:
- Bank accounts, foreign investments, ESOPs, mutual funds, or ETFs
- Shares in foreign companies or interests in partnerships/entities
- Overseas real estate, rental income, or inherited property
- Crypto or other digital assets held on foreign exchanges
If any foreign asset or income has not been properly disclosed in your ITR, the NUDGE serves as an opportunity to correct the position by filing a revised or updated return before 31 December 2025. Doing so can help you avoid unnecessary penalties, scrutiny, or complications later.
How Can Taxpertise Help?
Managing foreign asset reporting can be complex, especially when CRS/FATCA data is involved. At Taxpertise Accounting, we help taxpayers:
- Review past ITRs to identify any disclosure gaps related to foreign assets or income
- Correctly fill out Schedule FA and Schedule FSI in line with statutory requirements
- Interpret foreign financial data shared under CRS/FATCA
- File revised or updated returns within the permitted timelines
- Respond effectively to any queries or follow-up communication from the Income Tax Department
Whether you have received an SMS/email from the department or simply want peace of mind that your foreign disclosures are accurate, our team ensures a thorough and confidential review.
The Conclusion
The CBDT’s 2nd NUDGE initiative is a reminder that foreign asset reporting is under close global scrutiny. Rather than being a punitive action, this campaign offers taxpayers a window to correct unintentional mistakes and maintain clean compliance. If you have foreign holdings of any kind, now is the right time to review your filings and ensure complete and accurate disclosure. With expert guidance, the process becomes smooth, transparent, and fully compliant—protecting you from future legal or financial risks.
