CBDT Nudge Campaign Leads Over 30,000 Taxpayers to Declare Foreign Assets and Income

Government sources revealed that over 30,000 taxpayers have amended their income tax returns or submitted late returns, declaring additional foreign assets and income exceeding Rs 30,000 crore. This development follows an awareness initiative by the Central Board of Direct Taxes (CBDT), which began on November 16 last year. The campaign targeted taxpayers who had not reported substantial foreign income or assets in their returns for the assessment year 2024-25.

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Messages were dispatched to 19,501 individuals with significant foreign account balances or notable foreign income from interest or dividends surpassing a certain threshold. These communications urged taxpayers to amend their Income Tax Returns (ITRs) to accurately reflect their foreign holdings and earnings. As a result, 24,678 taxpayers reviewed their ITRs, while 5,483 filed belated returns for AY 2024-25, disclosing foreign assets valued at Rs 29,208 crore and additional foreign income amounting to Rs 1,089.88 crore.

Increased Voluntary Disclosures

The number of taxpayers voluntarily declaring foreign assets and income has shown a consistent rise from 60,000 in AY 2021-22 to 2,31,452 in AY 2024-25. This year saw a notable increase of 45.17 per cent in voluntary disclosures compared to AY 2023-24, attributed to extensive outreach and awareness efforts. Approximately 62 per cent of those contacted responded positively by voluntarily revising their ITRs to include foreign assets and income.

Additionally, the campaign led to changes in residential status for some taxpayers. A total of 6,734 individuals revised their status from Resident to Non-Resident. This shift indicates a growing awareness and compliance among taxpayers regarding the accurate reporting of foreign assets and income.

The CBDT's trust-first approach aims to encourage transparency and compliance among taxpayers. By fostering awareness and providing clear communication, the board seeks to ensure that individuals accurately report their financial holdings abroad. This initiative is part of broader efforts to enhance tax compliance and transparency in India.

This proactive approach by the CBDT underscores the importance of accurate reporting of foreign assets and income. As more taxpayers comply with these requirements, it reflects positively on the effectiveness of government initiatives aimed at improving tax compliance and transparency.