The Central Board of Direct Taxes (CBDT) “nudging campaign” has yielded significant results with 30,161 taxpayers declaring foreign assets worth over Rs 29,000 crore, government sources told media.
According to the sources, 24,678 taxpayers reviewed their ITRs and 5,483 taxpayers filed belated returns for AY 2024-25, declaring foreign assets worth Rs 29,208 crore and additional foreign income of Rs 1,089.88 crore. Furthermore, 6,734 taxpayers revised their residential status from Resident to Non-Resident. Overall, approximately 62 per cent 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 per cent growth compared to Assessment Year (AY) 2023-24.
In September 2024, India 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 Central Board of Direct Taxes (CBDT) launched a Compliance-Cum-Awareness Campaign on November 17, 2024, 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 Income Tax Department (ITD) 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.
As part of the campaign, 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.
This communication requested taxpayers to revise their Income Tax Returns (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. Government sources said that at the heart of this campaign lies the Trust First approach, 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.
They said by fostering transparency, education, and cooperation, the initiative has reinforced a compliance-friendly tax environment, ensuring that taxpayers can correct their filings proactively before any formal verification measures are undertaken.
“This shift towards a collaborative and trust-driven approach marks a significant step in strengthening India’s tax compliance framework while maintaining fairness and encouraging responsible financial disclosures,” a source said. 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 US under the Inter-Governmental Agreement pursuant to the Foreign Accounts Tax Compliance Act (FATCA), 2010.
(with inputs from ANI)
