The Income Tax Department is set to launch a major compliance drive this Friday, directly contacting approximately 25,000 high-risk taxpayers about their undisclosed foreign income and assets. This initiative follows a highly successful previous campaign that uncovered over ₹30,000 crore in previously hidden overseas wealth.
Direct Communication Through Messages and Emails
The Central Board of Direct Taxes (CBDT), India's apex direct tax policy-making body, announced on Thursday that it will send text messages and emails to identified taxpayers. The communication will strongly advise them to voluntarily review and revise their tax returns before the end of December 2024 to avoid severe financial penalties.
This action is powered by the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act of 2015. The law mandates harsh consequences for non-disclosure, including a flat penalty of ₹10 lakh, plus a tax of 30% and an additional penalty of a staggering 300% on the tax payable.
Building on a Proven Success Model
The first 'Nudge' campaign, launched in November 2024, specifically targeted taxpayers who were flagged by foreign tax jurisdictions as holding assets but had not declared them in their Indian income tax returns for the assessment year 2024-25.
The results were significant. "The initiative yielded positive outcomes, with 24,678 taxpayers (including several not directly nudged) revisiting their returns and disclosing foreign assets amounting to ₹29,208 crore, along with foreign-source income of ₹1,089.88 crore," the CBDT stated.
The current campaign focuses on high-risk cases for the assessment year 2025-26, where data suggests foreign assets exist but have not been reported in filed returns.
A Phased Approach for Wider Compliance
The strategy for this new drive is two-fold. In the initial phase, the tax authority will reach out to the selected 25,000 high-risk cases.
Starting in mid-December, the campaign will expand to cover other cases as well, with the broader goal of improving the overall compliance ecosystem. The term 'Nudge' itself is an acronym for 'Non-intrusive Usage of Data to Guide and Enable.'
To create maximum awareness, the department is also onboarding big corporations whose employees may have undisclosed foreign assets. Key industry bodies and the Institute of Chartered Accountants of India (ICAI) have been requested to help sensitize taxpayers.
Global Transparency and National Interest
Experts point out that this drive is crucial for India's fight against capital flight and unreported offshore wealth. Sandeepp Jhunjhunwala, partner at Nangia Group, explained that the department's insistence on full disclosure is grounded in legitimate goals: curbing tax evasion, expanding the tax base, and enhancing India's economic reputation.
He further noted that this push is also a by-product of India's commitments to global transparency frameworks like the OECD's common reporting standard. This framework requires countries to demonstrate they can both request and provide credible financial information.
The CBDT's insights into undisclosed assets come from the Automatic Exchange of Information (AEOI) framework India has with other nations, as well as information received from the US under its Foreign Account Tax Compliance Act (FATCA).
The board emphasized that it uses advanced data analytics to simplify compliance and reinforce a transparent relationship with taxpayers. This initiative aligns with the vision of a Viksit Bharat (Developed India), fostering a culture of accountability and voluntary compliance.
