In a significant compliance push, the Income Tax Department is preparing to send SMS and email alerts to nearly 25,000 individuals flagged as “high-risk” for failing to disclose foreign assets in their Income Tax Returns (ITRs) for Assessment Year (AY) 2025-26, according to senior government sources.
These high-risk cases have been identified using data shared by partner countries under the Automatic Exchange of Information (AEOI) framework, which allows India to receive detailed financial information of residents holding assets or income overseas.
CBDT Launches First Phase of Nudge Campaign
The Central Board of Direct Taxes (CBDT) will roll out the first phase of its compliance “nudge” campaign by sending targeted messages advising taxpayers to file revised returns by December 31, 2025, to avoid severe penalties under the law. Officials said this initiative is aimed at proactively encouraging voluntary compliance before stricter enforcement measures come into play.
A second phase, expected to begin in mid-December, will broaden the campaign’s scope to include additional categories of taxpayers whose disclosures appear incomplete or inconsistent.
To widen outreach, the tax department has also enlisted large corporations whose employees may own foreign assets but have not reported them. Industry bodies, the Institute of Chartered Accountants of India (ICAI), and various professional associations have been requested to help raise awareness.
AEOI Data Reveals Non-Reporting Risks
The Income Tax Department, in an official statement, confirmed that an analysis of AEOI information for the 2024-25 financial year had revealed multiple instances where taxpayers appear to own foreign assets that were not reflected in ITRs filed for AY 2025-26.
Under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, failure to disclose foreign assets can result in:
- A penalty of ₹10 lakh
- A tax levy of 30%
- A penalty of 300% on the tax amount payable
Previous Campaign Yielded Big Disclosures
This initiative mirrors last year’s AEOI-driven campaign, which prompted 24,678 taxpayers—including several who did not receive any SMS or email—to revise their returns. As a result, previously undisclosed foreign assets worth ₹29,208 crore and foreign income of ₹1,089.88 crore were reported in AY 2024-25.
Major Assessments and Searches Already Underway
Sources also revealed that until June 2025, tax authorities had completed assessments in roughly 1,080 cases, leading to a total demand of ₹40,000 crore. In addition, searches conducted in Delhi, Mumbai, and Pune—based on CRS data and spontaneous information exchanges, including details of Dubai-based investments—resulted in the detection of substantial undisclosed foreign income and assets running into hundreds of crores.
The CBDT receives data on overseas financial holdings of Indian residents under two frameworks:
- Common Reporting Standard (CRS) – a global standard for automatic exchange
- Foreign Account Tax Compliance Act (FATCA) – an information-sharing pact with the United States
This information enables the department to spot possible mismatches and guide taxpayers toward accurate and timely reporting.
Push for Accurate Foreign Asset Disclosure
Authorities emphasised that proper reporting of foreign assets and foreign-sourced income—particularly in Schedule FAand Schedule FSI of the ITR—is a statutory obligation under both the Income-tax Act, 1961, and the Black Money Act, 2015. The nudge campaign aims to improve voluntary compliance and reduce litigation by ensuring that taxpayers rectify discrepancies before the department initiates stricter action.
