Foreign Income Not in ITR? Expect Sharp NUDGE Before Dec 31

Foreign Income Not in Your ITR? Expect a Sharp NUDGE Before Dec 31!

What is NUDGE 2.0?

CBDT has launched NUDGE 2.0—a proactive, data-driven initiative to strengthen voluntary compliance for foreign assets and overseas income in AY 2025–26 ITRs. It uses global data-sharing systems like AEOI, CRS, FATCA, and information from overseas financial institutions to match disclosures in ITRs.

Objective

• Encourage transparency and responsible tax behavior
• Promote self-compliance and avoid unnecessary scrutiny
• Provide taxpayers a chance to rectify errors before enforcement

Mandatory Reporting – Zero Threshold

Every resident individual must disclose all foreign assets and income, including:

• Foreign bank accounts (peak & closing balance)
• ESOPs, equity holdings, mutual funds, insurance products
• Overseas properties & IP assets
• Dividends, interest, rent, capital gains from abroad
  Report in Schedule FA & Schedule FSI with TIN, DTAA article, and INR conversion via SBI TTBR rate.

Who Will Receive Alerts?

• Starting 28 Nov 2025, ~25,000 high-risk taxpayers will get SMS & email nudges.
• Deadline: 31 Dec 2025 to revise or update ITRs (ITR-U option available for 4 years).

Who Will Receive Alerts Under NUDGE 2.0?

Starting 28 November 2025, approx. 25,000 high-risk taxpayers will receive:

• SMS notifications, and

• Email alerts

Advising them to:

• Review their ITR,

• Cross-verify foreign disclosures, and

• Correct errors through revised or updated returns.

A second, larger phase of nudges will roll out in mid-December 2025. Deadline to Act: 31 December 2025

Why Act Now?

Last year’s NUDGE 1.0 results:

• 24,678 taxpayers corrected returns
• INR 29,208 crore foreign assets disclosed
• INR 1,089.88 crore foreign income recognized

Action Steps Before Dec 31

• Re-check ITR, especially Schedule FA & FSI
• Match disclosures with bank/investment statements
• File revised return or ITR-U if needed More details: www.incometax.gov.in

Consequences of Non-Compliance

• Black Money Act: INR 10 lakh penalty (INR 20 lakh threshold for non-real-estate assets) + imprisonment (6 months to 7 years)
• Income Tax Act: Penalty up to 120% of tax + interest + scrutiny

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