News: The Central Board of Direct Taxes (CBDT) is launching the second NUDGE Initiative based on its analysis of Automatic Exchange of Information (AEOI) data for FY 2024–25.
About NUDGE Initiative
- Full form: “Non-intrusive Usage of Data to Guide and Enable (NUDGE)” initiative
- Implementing agency: Central Board of Direct Taxes (CBDT)
- Nodal Ministry: Ministry of Finance
- Aim: To strengthen voluntary tax compliance through data-driven, non-intrusive communication.
- Focus: It focuses on helping taxpayers correctly disclose foreign assets and foreign-source income.
- First NUDGE Campaign: The first NUDGE Campaign was launched in November 2024.
- It targeted taxpayers flagged under Automatic Exchange of Information (AEOI) for not reporting foreign assets in AY 2024–25.
- It resulted in: 24,678 taxpayers revising returns, disclosure of ₹29,208 crore worth foreign assets and declaration of ₹1,089.88 crore foreign-source income.
- Second NUDGE Campaign: The second NUDGE Campaign was launched in November 2025.
- Under the campaign, SMSs and emails will be issued to such taxpayers whose foreign assets appear to exist but have not been reported in the ITRs filed for AY 2025-26.
- This is to advise them to review and revise their returns on or before 31st December 2025 to avoid penal consequences.
- The campaign aims to facilitate correct reporting in Schedule Foreign Assets (FA) and Foreign Source Income (FSI) in ITRs.
- Note: Accurate and complete disclosure of foreign assets and income is a statutory requirement under the Income-tax Act, 1961 and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
About Automatic Exchange of Information (AEOI)
- It is a system for the regular exchange of financial account information between tax authorities of different countries under international agreements developed by the Organisation for Economic Co-operation and Development (OECD).
- Objective: To promote global tax transparency and curb tax evasion by enabling jurisdictions to access information about their residents’ foreign financial assets.
- The framework operates through major international standards such as
- Common Reporting Standard (CRS)
- Foreign Account Tax Compliance Act (FATCA)
- These frameworks require financial institutions to identify and report accounts held by specified individuals and entities to their respective tax authorities.
- AEOI significantly aids tax administrations in detecting undisclosed offshore assets, recovering tax revenue, and encouraging voluntary compliance.
