The Income Tax Department has initiated a significant campaign to encourage individuals with overseas assets or income to properly disclose these details in their Indian tax returns. This marks the second such initiative by the tax authorities within a year.
Massive Outreach Targeting High-Risk Cases
Approximately 25,000 high-risk cases have been identified for the initial phase of this campaign. These taxpayers will receive direct communications through SMS and emails urging them to review their foreign asset declarations. The department plans to expand this outreach to cover more cases by mid-December.
The Central Board of Direct Taxes (CBDT) revealed that these high-risk cases were identified following thorough analysis of data received from other tax jurisdictions for 2024. The analysis indicated that these taxpayers appear to possess foreign assets that were not reported in their Income Tax returns for the financial year 2024-25.
December 31 Deadline for Compliance
This "second NUDGE campaign" specifically advises taxpayers to review and revise their returns by December 31 to avoid facing severe penal consequences. The CBDT emphasized that 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 campaign focuses on facilitating correct reporting in Schedule Foreign Assets and Foreign Source Income (FSI) sections of Income Tax Returns. This initiative comes exactly one year after a similar campaign resulted in nearly 25,000 taxpayers disclosing overseas assets worth Rs 29,000 crore and foreign income of Rs 1,090 crore.
Severe Penalties for Non-Compliance
The consequences of non-disclosure are substantial. The Black Money Act prescribes a penalty of Rs 10 lakh for failure to disclose overseas assets, in addition to a 30% tax and a 300% penalty on the taxable amount. The income tax department has already assessed approximately 1,080 cases, raising demands totaling Rs 40,000 crore until June 2025.
Recent enforcement actions have demonstrated the department's seriousness. Based on data received regarding investments in Dubai, searches were conducted in Delhi, Mumbai, and Pune, unearthing undisclosed foreign assets and income worth several hundreds of crores, according to official statements.
The campaign also involves collaboration with corporate entities and professional bodies. Large companies whose employees possess foreign assets are being onboarded to help sensitize taxpayers. Industry associations and the Institute of Chartered Accountants of India have been requested to create awareness about the disclosure requirements.
