IT Dept to target 25,000 high-risk cases as CBDT launches 2nd NUDGE initiative on foreign assets

The Income Tax Department is preparing a major compliance push aimed at taxpayers who have failed to disclose foreign assets, with the first phase targeting around 25,000 high-risk cases, sources told CNBC-TV18.

The move comes as the Central Board of Direct Taxes (CBDT) on Thursday formally launched the second NUDGE initiative, expanding its data-driven and non-intrusive reporting campaign focused on offshore asset disclosures.

CBDT said the initiative reflects its shift toward a technology-enabled, trust-based and voluntary compliance framework, using deeper analytics and global information exchange systems to detect potential under-reporting.

Background: First NUDGE campaign delivered strong results

According to the CBDT’s press release, the first NUDGE campaign, rolled out in November 2024, specifically targeted taxpayers who were flagged by foreign jurisdictions under the Automatic Exchange of Information (AEOI) framework for holding offshore financial assets that were not declared in their ITRs. That effort prompted 24,678 taxpayers to revisit filings and disclose foreign assets worth ₹29,208 crore, along with foreign-source income of ₹1,089.88 crore.

CBDT receives granular information under the Common Reporting Standard (CRS) from partner jurisdictions and from the US under FATCA. This data, the Board noted, is central to identifying gaps, guiding taxpayers to correct reporting, and strengthening voluntary compliance.

Phase 1: High-risk cases; Phase 2 from mid-December

Sources said that as part of the new drive, the tax department will first focus on approx. 25,000 high-risk cases flagged after analysis of AEOI information for FY24-25 revealed potential undisclosed foreign assets in ITRs for AY25-26. These taxpayers will begin receiving SMS and email nudges starting November 28, advising them to revisit and revise returns by December 31, 2025 to avoid penal consequences.

A second phase beginning mid-December will broaden the campaign’s coverage, with more categories of taxpayers being nudged to strengthen the overall compliance ecosystem.

Corporates, ICAI, industry bodies roped in

Parallelly, major corporates—especially those with employees holding undeclared foreign assets—are being onboarded to sensitise their workforce on compliance requirements. Industry bodies, ICAI and various professional associations have also been requested to step up awareness programmes, sources added.

Penalties under Black Money Act remain steep

Sources reiterated that the Black Money Act imposes stringent consequences for non-disclosure of foreign assets, including a ₹10 lakh flat penalty, 30% tax, and a 300% penalty on the tax payable. The Income Tax Department has already assessed 1,080 cases, raising demands of nearly ₹40,000 crore as of June 2025.

Searches in major cities reveal hundreds of crores in undisclosed assets

In addition to nudges, enforcement remains active. Searches conducted in Delhi, Mumbai and Pune—based on information received under CRS and spontaneous data exchange relating to investments in Dubai—have uncovered several hundred crores worth of undisclosed foreign assets and income, sources said.

Officials emphasised that the department is taking information received through CRS/FATCA “very seriously”, given the enhanced visibility global data-sharing now provides.

Non-compliant cases may face scrutiny after NUDGE

While the NUDGE approach emphasises facilitation, sources said cases failing to comply despite reminders may be moved into deeper scrutiny and verification.

CBDT said the initiative aligns with the government’s broader Viksit Bharat vision of fostering transparency, accountability and a culture of voluntary compliance through a PRUDENT (Proactive, Risk-based, User-friendly, Data-driven) approach.