Tax Department Issues Alerts Over Undisclosed Foreign Assets

The Income Tax Department has identified several high-risk cases in which taxpayers failed to disclose their foreign assets in their ITRs for AY 2025-26. Starting November 28, 2025, the department will send SMS and email alerts to these taxpayers, asking them to revise their returns by December 31, 2025. This step is intended to improve compliance and prevent the concealment of overseas assets.

1. High-Risk Cases Identified Through AEOI Data

The Income Tax Department used advanced data analytics and information received through the Automatic Exchange of Information (AEOI) to identify individuals who may have unreported foreign assets.

India receives this data every year from the Common Reporting Standard (CRS) submissions from many countries and from FATCA submissions from the U.S.

For the financial year 2024-25, the department found major gaps between what taxpayers reported and their actual overseas assets.

2. Department to Issue Alerts Starting November 28

The department will start issuing alert messages from November 28 to taxpayers whose ITRs show mismatches. These alerts will recommend filing a corrected return by December 31, 2025, helping taxpayers fix issues before penalties or prosecution are initiated.

3. Previous Compliance Drive Saw Massive Disclosures

A similar initiative undertaken last year led to remarkable results. In AY 2024-25, 24,678 taxpayers—including many who did not receive alerts—revised their returns and disclosed:

• ₹29,208 crore in foreign assets
• ₹1,089.88 crore in foreign-source income

Overall, the department’s nudge-based compliance mechanism prompted disclosures totalling ₹30,298 crore.

Government Encourages Voluntary Correction Amid Tighter Offshore Rules

• The government’s focus on offshore transparency has intensified amid global efforts to share tax information. Accurate reporting under Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income) is mandatory.
• Non-disclosure may attract severe consequences under the Income-tax Act, 1961, and the Black Money (Undisclosed Foreign Income and Assets) Act, 2015.
• The alerts issued are intended to give taxpayers an opportunity to voluntarily correct their filings before enforcement action begins.

Conclusion

The latest initiative reflects India’s strengthened monitoring of overseas financial holdings and its commitment to curbing undisclosed foreign assets. Taxpayers who may have missed reporting such assets in AY 2025-26 are urged to make timely corrections before December 31, 2025, to avoid penal consequences. With global transparency improving, accurate disclosure has become both a legal necessity and a prudent compliance practice.