The Income Tax Department has initiated a significant campaign targeting Indian taxpayers with undisclosed overseas assets and foreign income. This marks the second such initiative by the tax authorities to ensure proper disclosure of foreign holdings.
Massive Outreach to High-Risk Cases
Approximately 25,000 high-risk cases have been identified for the initial phase of this campaign. The tax department will reach out to these taxpayers through SMS and email communications, urging them to review and correct their income tax returns.
According to official statements, the Central Board of Direct Taxes (CBDT) identified these cases after analyzing data received from other tax jurisdictions for 2024. The analysis revealed situations where foreign assets appear to exist but were not reported in income tax returns filed for assessment year 2025-26.
December 31 Deadline and Penal Consequences
The department has set a strict deadline of December 31 for taxpayers to revise their returns voluntarily. This "second NUDGE campaign" aims to facilitate correct reporting in Schedule Foreign Assets (FA) and Foreign Source Income (FSI) in ITRs.
Accurate disclosure of foreign assets and income is a statutory requirement under both the Income-tax Act, 1961 and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The Black Money Act prescribes severe penalties for non-compliance, including:
- Fixed penalty of Rs 10 lakh for non-disclosure of overseas assets
- Tax of 30% on the taxable amount
- Additional penalty of 300% on the taxable amount
Building on Previous Success
This initiative comes exactly one year after a similar campaign yielded substantial results. The previous effort led to nearly 25,000 taxpayers disclosing overseas assets worth over Rs 29,000 crore and foreign income of Rs 1,090 crore.
The current campaign is proposed to expand in mid-December to cover additional cases and further improve the compliance ecosystem. Tax officials have already assessed around 1,080 cases, raising demands of Rs 40,000 crore till June 2025.
Enhanced Enforcement and Awareness
The department has intensified its enforcement actions based on foreign investment data. Recent searches conducted in Delhi, Mumbai, and Pune uncovered undisclosed foreign assets and income worth several hundreds of crores related to investments in Dubai.
As part of the comprehensive compliance drive, the tax department is onboarding large companies whose employees have foreign assets but haven't disclosed them. Additionally, industry bodies including the Institute of Chartered Accountants of India (ICAI) and other associations have been requested to help create awareness among taxpayers.
Over recent years, income tax authorities have significantly enhanced their use of data analytics to encourage taxpayers to accurately disclose their income, initially through gentle nudges to come clean about their financial holdings.
