Have you received an SMS or Email from Income Tax Department on Foreign Assets? Read This Carefully

The Income Tax Department has begun sending SMS and email alerts to taxpayers regarding possible non-disclosure of foreign assets and foreign source income in Income-tax Returns for AY 2025-26, under the second phase of CBDT’s NUDGE initiative. Based on data received through the Automatic Exchange of Information (AEOI) framework, including CRS and FATCA, the Department has identified cases where foreign bank accounts, investments, or insurance products appear linked to PANs but are not reported in Schedule FA or Schedule FSI. This is not a scrutiny notice but a pre-emptive opportunity to voluntarily correct omissions by filing a revised return on or before 31 December 2025. Disclosure is mandatory for Resident and Ordinarily Resident taxpayers, irrespective of account size, activity, or overseas tax payment. Past NUDGE campaigns resulted in significant voluntary disclosures, reinforcing the seriousness of this initiative. Ignoring the communication may expose taxpayers to penalties under the Income-tax Act and the Black Money Act.

A. Introduction

If you have received an SMS or email from the Income Tax Department asking you to review disclosure of foreign assets in your Income-tax Return for AY 2025-26, this is not a routine reminder that can be conveniently ignored.

The Central Board of Direct Taxes (CBDT) has launched the second phase of its NUDGE initiative, and this time the focus is on foreign assets and foreign source income not reported in Schedule FA and Schedule FSI.

The Department already has information relating to foreign assets mapped to your PAN. Instead of initiating proceedings straightaway and catching taxpayers off guard, it has chosen a more transparent approach by informing them upfront and allowing time to revise the return by appropriately reporting such details.

B. Why This Message Is Being Sent Now

Based on analysis of Automatic Exchange of Information (AEOI) data for FY 2024-25 (Calendar Year 2024), CBDT has identified high-risk cases where foreign assets appear to exist but are missing from the Income-tax Returns filed for AY 2025-26.

Accordingly, SMSs and emails are being issued from 28 November 2025, advising taxpayers to review and revise their returns on or before 31 December 2025 to avoid penal consequences.

 This is not scrutiny. It is the calm before scrutiny.

C. How the Data Was Obtained and Any Exceptions?

Foreign jurisdictions routinely share financial information of Indian residents under:

• Common Reporting Standards (CRS), and
• FATCA framework with the United States.

This data includes details of foreign bank accounts, custodial accounts, overseas investments and certain insurance products.

Many taxpayers still operate under dangerous assumptions — that the account is inactive, the balance is insignificant, or tax has already been paid overseas. Disclosure under Schedule FA is mandatory irrespective of the taxability of such income in India. Non-disclosure is considered a reporting failure.

There are no exceptions to this rule. If you are Resident and Ordinary Resident even having a “Small Account / Dormant Account” needs to be reported. Claims such as “Small / Dormant Account”, “No Income”, “Already Taxed Abroad” are not acceptable.

D. What Happened in the First NUDGE Campaign (And Why This One Matters More)

CBDT’s confidence in this approach is backed by hard numbers.

Under the first NUDGE campaign launched on 17 November 2024:

• 24,678 taxpayers revisited their returns,
• Foreign assets worth ₹29,208 crore were disclosed, and
• Foreign source income of ₹1,089.88 crore was reported.

Significantly, several disclosures came from taxpayers who were not even directly nudged. The data spoke louder than the message.

The second campaign builds on this success and targets disclosures for AY 2025-26, where the Department already has AEOI confirmation.

E. What Exactly Is Being Verified

The current campaign focuses on:

• Schedule FA (Foreign Assets), and
• Schedule FSI (Foreign Source Income)

in the Income-tax Return.

Accurate and complete disclosure is a statutory requirement under the Income-tax Act, 1961, and serious cases may also attract provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which carries stringent penalties and prosecution provisions.

This is precisely why CBDT is giving taxpayers a chance to correct the record voluntarily.

F. What You Should Do If You Receive This Communication

If you have received an SMS or email under this campaign:

• Do not dismiss it as generic communication.
• Revisit your Income-tax Return for AY 2025-26.
• Carefully verify Schedule FA and Schedule FSI with overseas bank statements and investment records.
• If any omission or incorrect reporting is identified, file a revised return on or before 31 December 2025.

Waiting for a notice and then claiming that the omission was “unintentional” is unlikely to help when the Department already has third-party confirmation from foreign jurisdictions.

G. CBDT’s PRUDENT Approach – A Polite Warning, Not a Threat

CBDT has described this initiative as PRUDENT — Professional, Responsible, Understanding, Data-based, Effective with empathy, Non-intrusive and Technology-driven.

In simple terms, the Department is saying:
“We know. We are telling you that we know. Please fix it yourself.”

The message is polite. The implications are not.

H. Final Word

The second NUDGE campaign is not about enforcement — yet. It is about voluntary correction before enforcement becomes unavoidable.

Taxpayers holding foreign assets would be wise to treat this communication as a final opportunity to clean up disclosures for AY 2025-26 and avoid prolonged litigation, penalties and unnecessary stress.

Silence, this time, is not a strategy. 

In case you have any questions / query, you can email me at sharshil323@gmail.com.