CBDT's NUDGE Initiative for Unreported Foreign Assets

The Central Board of Direct Taxes (CBDT) has initiated the second phase of its Non-intrusive Usage of Data to Guide and Enable (NUDGE) campaign. This initiative is focused on targeting taxpayers who have not reported foreign assets.

Objectives and Targets

• The campaign aims to promote voluntary compliance among taxpayers by encouraging them to review and revise their tax returns by December 31 to avoid penalties.
• It has assessed around 1,080 cases, raising a demand of nearly ₹40,000 crore as of June.
• The initiative targets high-risk cases with apparent unreported foreign assets, initially focusing on approximately 25,000 taxpayers.

Implementation Strategies

• Taxpayers with undisclosed foreign assets will receive SMS and email notifications urging them to accurately disclose their assets and income.
• The CBDT will collaborate with industry bodies and large companies to address non-disclosure among employees with foreign assets.

Historical Context and Goals

The first phase of the NUDGE campaign in November 2024 successfully encouraged 24,678 taxpayers to disclose foreign assets worth ₹29,208 crore and foreign-source income of ₹1,089.88 crore.

Penalties and Regulatory Framework

• Under the Black Money Act, non-disclosure of foreign assets incurs a penalty of Rs 10 lakh, 30% tax, and a 300% penalty on the payable tax.
• The CBDT utilizes information from partner jurisdictions through the Automatic Exchange of Information framework, Common Reporting Standards, and the Foreign Account Tax Compliance Act to enhance transparency and compliance.

Alignment with Government Vision

This initiative aligns with the government’s vision of Viksit Bharat—transforming India into a developed nation by 2047—by fostering a culture of voluntary compliance and transparency.