CBDT Launches Second NUDGE Initiative to Boost Offshore Asset Compliance

The Central Board of Direct Taxes (CBDT) has formally rolled out the second phase of its NUDGE initiative, aimed at improving voluntary compliance on offshore asset reporting. The campaign leverages advanced analytics and global data exchange systems to identify potential under-reporting and guide taxpayers toward accurate disclosures.

This move underscores the department’s shift to a technology-enabled, trust-based compliance framework. The first NUDGE campaign in November 2024 prompted thousands of taxpayers to revise filings and declare previously undisclosed foreign assets.

Background of the NUDGE Initiative

The initial NUDGE campaign targeted individuals flagged under the Automatic Exchange of Information (AEOI) framework for holding offshore financial assets not declared in income tax returns. That effort led to 24,678 taxpayers disclosing foreign assets worth ₹29,208 crore and foreign-source income of ₹1,089.88 crore. CBDT receives granular data under the Common Reporting Standard (CRS) and FATCA agreements, which form the backbone of its compliance strategy.

Focus of the Second Phase

The new campaign will initially cover approximately 25,000 high-risk cases identified through AEOI data analysis for FY24-25. These taxpayers will receive SMS and email nudges starting November 28, advising them to revisit and revise returns for AY25-26 by December 31, 2025 to avoid penalties. A broader outreach phase will begin mid-December, expanding the campaign’s coverage to more categories of taxpayers.

Compliance Measures and Penalties

CBDT has reiterated that non-disclosure of foreign assets attracts stringent consequences under the Black Money Act, including a ₹10 lakh penalty, 30% tax, and a 300% penalty on tax payable. The Income Tax Department has already assessed 1,080 cases, raising demands of nearly ₹40,000 crore as of June 2025. Enforcement actions remain active, with recent searches in Delhi, Mumbai and Pune uncovering several hundred crores worth of undisclosed foreign assets and income.

Industry Engagement and Awareness

Parallel efforts involve onboarding corporates to sensitise employees about compliance requirements. Professional bodies such as ICAI have been requested to intensify awareness programmes. Officials emphasised that information received through CRS and FATCA is being taken “very seriously”, given the enhanced visibility global data-sharing now provides. Cases failing to comply despite reminders may face deeper scrutiny and verification.

Read More: CBDT Enables Online Closure of Capital Gains Accounts.

Conclusion

The second NUDGE initiative reflects CBDT’s commitment to fostering transparency and voluntary compliance through a proactive, risk-based approach. By combining facilitation with enforcement, the department aims to strengthen India’s tax ecosystem and align with the government’s Viksit Bharat vision.

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