The Income Tax Department is set to initiate a renewed push for financial transparency through the launch of the second phase of its NUDGE campaign, beginning Friday, November 28, 2025. The campaign, which stands for Non-Intrusive Usage of Data to Guide and Enable, is aimed at reminding and encouraging taxpayers to accurately declare any foreign assets acquired during the previous financial year (FY 2024–25). Taxpayers who may have omitted or overlooked such disclosures in their Income Tax Returns (ITRs) for the current assessment year (AY 2025–26) will be urged to revise their filings by December 31 to avoid penal action under Indian tax laws.

The Central Board of Direct Taxes (CBDT) announced the initiative following its detailed analysis of data received under the Automatic Exchange of Information (AEOI) framework. The AEOI system enables India to receive periodic financial information about Indian residents holding accounts or assets in foreign jurisdictions. The CBDT’s review of the FY 2024–25 data identified a significant number of high-risk cases where foreign assets appear to exist, but they were not reported in corresponding ITRs, indicating potential discrepancies or non-compliance.

According to the finance ministry’s statement, this prompted the decision to roll out the second NUDGE campaign. Starting Friday, SMS and email advisories will be sent to taxpayers flagged in the AEOI analysis. These messages will encourage recipients to revisit their previously filed returns, check the accuracy of their foreign asset disclosures, and make appropriate revisions before the December 31 deadline. Failure to comply may trigger penalties under the Income Tax Act or the stringent Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act.

The NUDGE initiative is not new. The first phase of the campaign was launched on November 17, 2024, when similar discrepancies were detected for AY 2024–25. That initial campaign focused on taxpayers who had been reported by foreign jurisdictions as holding foreign financial assets but had failed to disclose them in their returns. It yielded unexpectedly strong results, underscoring the effectiveness of a non-intrusive, advisory-led approach.

During the first campaign, 24,678 taxpayers—many of whom were not directly nudged—voluntarily revisited their filings. They collectively disclosed foreign assets worth ₹29,208 crore and foreign-source income amounting to ₹1,089.88 crore. The success of the initiative demonstrated that a data-driven compliance strategy, when combined with advisory intervention rather than enforcement-first tactics, can lead to substantial improvements in reporting accuracy.

The new campaign retains this philosophy. It seeks to promote correct reporting of both foreign assets (FA) and foreign-source income (FSI), which are mandatory disclosures under Indian tax law. The Income Tax Act requires residents to declare any movable or immovable assets held outside India, such as foreign bank accounts, shares, securities, immovable property, beneficial interests, and financial instruments. Simultaneously, the Black Money Act imposes steep penalties and prosecution for the willful concealment of such assets or income. The NUDGE model seeks to reduce inadvertent lapses by reminding taxpayers of their responsibilities before invoking harsher statutory measures.

In parallel with NUDGE, CBDT has also highlighted its broader administrative approach encapsulated in the acronym PRUDENT. This framework defines the department’s guiding principles:

• Professionalism,
• Responsibility and responsiveness,
• Understanding,
• Dedication and due diligence,
• Effective enforcement with empathy,
• Non-intrusive administration, and
• Technology-based tax systems.

Together, these principles aim to modernize India’s tax governance, reduce friction between the taxpayer and the department, and create a more transparent and trust-based compliance culture. The NUDGE initiative is one of the major operational expressions of this vision.

The finance ministry stated that the campaign supports the larger national objective of building a “Viksit Bharat” (developed India) by 2047. Enhancing tax transparency and voluntary compliance, the ministry said, is critical to strengthening revenue flows and reinforcing public trust in tax administration. The government believes that a sensitive, technology-driven system can encourage higher compliance while reducing the sense of intrusion or burden on honest taxpayers.

The department’s capabilities have been significantly enhanced by access to foreign financial data under international frameworks. India receives detailed information from partner countries under the Common Reporting Standard (CRS), an initiative of the Organisation for Economic Co-operation and Development (OECD), and from the United States under the Foreign Account Tax Compliance Act (FATCA). These frameworks enable automatic annual sharing of information regarding overseas bank accounts, investment holdings, interest payments, dividends, and other financial indicators associated with tax residents.

Such data flows have allowed Indian authorities to identify anomalies between reported income and overseas financial activity. In the past, mismatches often went undetected due to limited international cooperation. Today, the CBDT’s analytical systems—powered by artificial intelligence, big-data tools, and algorithmic risk assessment—make it possible to quickly flag inconsistencies and direct nudges to the right individuals.

The department maintains that NUDGE is not an enforcement threat but a compliance facilitation tool. It aims to help taxpayers rectify omissions voluntarily rather than face scrutiny, penalties, or prosecution later. However, officials also clarified that repeated or intentional non-disclosure may result in legal consequences under the relevant statutes.

By leveraging digital communication—SMS alerts, emails, and occasionally portal-based prompts—the department hopes to reach taxpayers quickly and guide them toward corrective action. The December 31 cut-off ensures sufficient time for taxpayers to review their filings while allowing the department to conclude its compliance assessments within the financial year.

As India continues to deepen its global financial integration, the tax department’s access to overseas asset information is likely to expand further. The NUDGE initiative represents a shift toward a governance model that blends technology, international cooperation, and behavioral insight to guide taxpayers towards fulfilling their obligations.

Through this second campaign, the CBDT aims not only to enhance revenue mobilisation but also to reinforce the culture of honesty and transparency that forms the backbone of modern tax administration. By urging taxpayers to voluntarily disclose foreign assets and income before the deadline, the initiative underscores the government’s commitment to building a non-adversarial, efficient, and forward-looking tax ecosystem.