New Delhi: The Income Tax department will launch a campaign on Friday to encourage around 25,000 high-risk assessees to report their undisclosed foreign income and assets that came to the knowledge of the tax department, following a similar earlier effort that led to the disclosure of more than ₹30,000 crore in foreign earnings and assets.
The Central Board of Direct Taxes (CBDT), the apex policy-making body for direct taxes, on Thursday said it will send text messages and emails to identified taxpayers advising them to voluntarily audit and amend their tax returns by the end of December to avoid penalties.
The Black Money (Undisclosed Foreign Income and Assets) and Taxation Act 2015 provides for a penalty of ₹10 lakhs for non-disclosure of foreign assets, in addition to a tax of 30% and a penalty of 300% of the tax payable.
The first such campaign, launched in November 2024, targeted selected taxpayers who were designated as asset holders by foreign tax jurisdictions but failed to declare the same in their Indian income tax returns for the assessment year 2024-25.
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“The initiative brought positive results, 24,678 taxpayers (including several indirectly pushed) reassessed their tax returns and disclosed foreign assets worth ₹29,208 crore, along with income from foreign source ₹1,089.88 million dollars,” the CBDT said.
According to the law, those who have not declared their foreign income and assets in their tax return must amend their tax return by the end of December. Assessees are required to disclose foreign assets and income as well as any tax credits claimed under a double taxation agreement between India and the country in which the assets are located.
The tax office will first select about 25,000 high-risk cases and approach them, a person familiar with the development said on condition of anonymity. The CBDT found that some high-risk cases where foreign assets appear to exist were not reported in the income tax returns filed for the assessment year 2025-26.
Planning ahead
In the second phase, starting in mid-December, the Nudge campaign would expand to other cases to improve the compliance ecosystem, the person said. Nudge stands for ‘Non-intrusive Usage of Data to Guide and Enable’.
“Large corporates whose employees have foreign assets and have not disclosed them are also on board to increase taxpayer sensitivity. Information authorities have also been sought by industry bodies, the Institute of Chartered Accountants of India (ICAI) and associations,” the person said.
Experts said India has long struggled with capital flight and undeclared offshore wealth. The Income Tax department’s insistence on full and accurate disclosure of foreign assets and income is based on legitimate goals to curb tax evasion, broaden the tax base and improve India’s economic reputation, said Sandeepp Jhunjhunwala, partner at Nangia Group, a business advisory firm.
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“Comprehensive disclosure of foreign assets is also a by-product of India’s commitments to global transparency frameworks such as the OECD’s Common Reporting Standard, which forces the country to demonstrate that it can demand and provide credible financial information,” Jhunjhunwala said. The Organization for Economic Cooperation and Development is a network of 38 member countries.
Comprehensive data on foreign assets also provide policymakers with valuable insights into trends in overseas investment and wealth accumulation, and support more informed regulation of capital flows and anti-money laundering measures, Jhunjhunwala added.
Learning from the exchange
The CBDT obtained information on undisclosed foreign assets held by Indian residents under the automatic exchange of information framework that India has with other countries.
The second Nudge campaign aims to facilitate correct reporting of foreign assets and income in tax returns, the CBDT said. Accurate and complete disclosure of foreign assets and income is a statutory requirement under the Income Tax Act and the Black Money Act, the CBDT said.
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“The CBDT uses advanced data analytics to streamline compliance processes, reduce information asymmetry and strengthen a transparent and trust-oriented interface with taxpayers. The initiative is in line with the Viksit Bharat vision, promoting accountability, transparency and a culture of voluntary compliance,” the authority said.
India also receives information about assets held in the US by Indians under the country’s Foreign Account Tax Compliance Act (Fatca).
