India’s Income Tax Department has intensified its scrutiny of undisclosed overseas assets, warning employees of multinational corporations (MNCs) to declare all foreign holdings before the December 31 deadline. Non-compliance could attract steep penalties of up to ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) Act.

As part of the second phase of its NUDGE (Non-intrusive Usage of Data to Guide and Enable) campaign launched on November 28, tax authorities have reached out to several global corporations - including a prominent consumer healthcare company, a wireless technology major, and a US-based semiconductor giant - alerting them that some of their India-based employees have unreported overseas assets.

Global Data Exchange Driving Faster Enforcement

This crackdown follows a rapid increase in the exchange of financial data under international frameworks like the Automatic Exchange of Information (AEOI), US FATCA, and the Common Reporting Standard (CRS).
Tax experts report that the Indian government now receives foreign asset data within just six months of a financial year closing - dramatically improving compliance tracking.

“The government is getting data within six months of the year-end. The department is sending reminders via SMS and emails, which allows genuine taxpayers to revise or update returns without landing in litigation,” explained Rajesh Shah, partner at Jayantilal Thakkar & Co.

The campaign initially targets around 25,000 high-risk taxpayers for FY 2024–25, with broader outreach expected by mid-December. The first NUDGE campaign earlier in 2024 led to 24,678 taxpayers disclosing assets worth ₹29,208 crore and foreign income exceeding ₹1,089 crore.

What Needs to Be Disclosed

Indian residents must report all foreign holdings in Schedule FA of their income tax return—whether or not they have generated income. This includes:

• Employee Stock Option Plans (ESOPs) and Restricted Stock Units (RSUs)

• Shares of overseas companies

• Foreign bank accounts

• Dividends, interest, and capital gains from abroad

“Employees holding ESOPs or RSUs are required to disclose them, even if no income has been realized. Even small overseas income, such as dividends worth a few US dollars, must be reported,” said Himank Singla, founding partner at SBHS & Associates.

Penalties and Deadlines

Failing to report foreign assets can invite penalties up to ₹10 lakh annually under the Black Money Act - and in serious cases, prosecution. Experts caution that filing an updated return may not guarantee protection from penalties since Section 43 of the Act does not explicitly allow immunity for updated returns.

Taxpayers who missed the initial disclosure window can still file revised returns for AY 2025–26 by December 31, 2025. Advisors say many oversights come from misunderstanding, not evasion - particularly among employees unaware that global data sharing now exposes even small foreign investments.

“Assuming these assets will go unnoticed is both risky and incorrect,” Singla warned.