Income Tax dept's nudge campaign prompts record ₹29,000 crore foreign asset disclosures for AY 2024-25

Taxpayers have declared foreign assets to the tune of ₹29,000 crore and additional foreign income worth ₹1,089.88 crore for the assessment year 2024-25 as a result of the nudge campaign by the Central Board of Direct Taxes (CBDT), conducted based on information received from over a hundred foreign jurisdictions.

“The campaign yielded significant results, with 24,678 taxpayers reviewing their income tax returns (ITRs) and 5,483 taxpayers filing belated returns for AY 2024-25, declaring foreign assets worth ₹29,208 crore and additional foreign income of ₹1,089.88 crore. Furthermore, 6,734 taxpayers revised their residential status from resident to non-resident,” said government sources close to the development.

“Overall, approximately 62% of nudged taxpayers responded positively, voluntarily revising their ITRs to declare foreign assets and income. The number of taxpayers disclosing foreign assets and income on a voluntary basis has steadily grown from 60,000 in AY 2021-22 to 2,31,452 taxpayers in AY 2024-25. This year, due to extensive outreach and awareness efforts, voluntary disclosures witnessed a significant 45.17% growth compared to AY 2023-24,” sources said.

It may be noted that India is one of the early adopters of Common Reporting Standards (CRS) and has been receiving data since 2018 for the calendar year 2016 and onwards. More than 125 countries have agreed to share financial information of individuals linked to other jurisdictions on an automatic basis, including details of accounts held, account balances, dividends, interest received, and gross payments. A similar exchange occurs with the USA under the Inter-Governmental Agreement pursuant to the Foreign Accounts Tax Compliance Act (FATCA), 2010.

Going forward, in September last year, tax authorities received financial information from over 108 countries regarding foreign accounts and income in the form of interest and dividends earned outside India.

Using this data received under the automatic exchange of information, the CBDT launched a compliance-cum-awareness campaign in November last year, urging taxpayers to declare their foreign assets and income in revised ITRs for Assessment Year (AY) 2024-25.

“This campaign followed a system-driven and taxpayer-friendly approach, utilizing the information received through CRS and FATCA. The IT department facilitated taxpayers by providing a step-by-step guide to filling schedule foreign assets and schedule foreign source income, along with explanatory materials to help them understand the information received under these frameworks,” sources said.

“SMS and emails were sent to 19,501 taxpayers with high foreign account balances or significant foreign income from interest or dividends above a specified threshold,” said sources, adding that these communications requested taxpayers to revise their ITRs to reflect their foreign assets and income accurately. “Additionally, 30 outreach sessions, seminars, and webinars were conducted across India, engaging over 8,500 participants directly. Pamphlets, brochures, and elaborate Samvaad sessions on social media further amplified awareness,” they pointed out.

CBDT followed a trust-first approach in the initiative, which prioritises voluntary compliance over enforcement. “Instead of immediate verification or intrusive actions, the department has trusted taxpayers first, giving them ample opportunity to make true and complete disclosures of their foreign income and assets,” sources said.