MC EXCLUSIVE Business families under scanner: Income Tax dept to send notices over undisclosed overseas assets

The exercise that the I-T Department will undertake now (on business families) is the next step of the NUDGE campaign.

• I-T Dept to notify families about undisclosed foreign assets
• Major city business families face tax, penalties, and prosecution
• Small taxpayers can disclose minor assets with a one-time scheme.

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The Income Tax Department has identified several business families that allegedly failed to disclose foreign assets or sources of overseas income in their tax returns and is preparing to issue notices in the coming months to enforce compliance, officials said.

These families are based in cities including Ahmedabad, Surat, Chennai, Hyderabad, Bengaluru, and Mumbai.

"The foreign assets they hold have a value to the tune of thousands of crores. I-T Department officials across jurisdictions are collecting all the data to come up with a concrete figure. The CBDT nodal office in Delhi is also examining some cases," one of the I-T officials said. "Once we are ready with all the evidence, we will act on it and send notices."

"I-T Department gets data on foreign assets and foreign bank account holdings from other countries. This helps us in estimating the actual tax liability of individuals as well as companies," the official said.

In a November 27 press release, the I-T Department explained that an analysis of the 'Automatic Exchange of Information' for 2024-25 by the Central Board of Direct Taxes (CBDT) has identified high-risk cases where foreign assets appear to exist but have not been reported in the ITRs filed for AY 2025-26 (for FY25).

The AEOI is a framework developed by OECD countries to combat tax evasion. Under the AEOI, a Common Reporting Standard (CRS) has been developed, through which the financial institutions of the “source” jurisdiction collect and report information to their tax authorities about account holders (or residents) in other countries. This information is exchanged with the resident's "home country" annually.

In 2024, the I-T Department launched a NUDGE campaign targeting select taxpayers who had been reported by foreign jurisdictions under the AEOI framework as holding foreign assets that were not disclosed in their income tax returns (ITRs) for AY2024-25. This initiative had yielded positive outcomes, with 24,678 taxpayers revisiting their returns and disclosing foreign assets amounting to Rs 29,208 crore, along with foreign-source income of Rs 1,090 crore.

Officials said the exercise that the I-T Department will undertake now (on business families) is the next step of the NUDGE campaign.

"Many Indian families have some form of overseas financial linkage, whether through inheritance, prior employment, or family arrangements, and not all such holdings have been reported," said a second person.

"The underlying data source for most of these actions is CRS. Notices will give reference to specific overseas accounts or assets without disclosing the precise origin of the information," the person said. "The department has been issuing CRS-linked notices for the past two years, and the volume is rising. These notices will ask taxpayers to review disclosures, pay any due taxes, and, where applicable, file revised returns."

As per the extant law, a 30 percent tax will be levied on the value of an undisclosed foreign asset or income. "For this purpose, the value of undisclosed assets shall be the value of such asset in the previous year in which the asset comes to the notice of the tax officer. In addition to taxes, a penalty equivalent to 3 times the taxes may also be levied," said Abheet Sachdeva, Partner, Nangia Global.

Sachdeva says that with the introduction of the Black Money Act, significant financial levies (taxes and penalties) as well as prosecution have been prescribed in matters involving undisclosed foreign assets and income, which act as a deterrent to self-disclosure by business families.

In the Union Budget 2026, Finance Minister Nirmala Sitharaman announced a “one-time six-month” scheme for small taxpayers (students, young professionals, tech employees, relocated NRIs) to nudge them to disclose foreign assets or income below a certain size, and pay tax on it. The beneficiaries of this scheme will not face any penalty.

The scheme says if the limit of undisclosed income/asset is proposed to be up to Rs 1 crore, the individual needs to pay 30 percent of the fair market value of assets or 30 percent of the undisclosed income as tax, and 30 percent as additional income tax in lieu of penalty and would thereby get immunity from prosecution.

Business families don’t qualify to avail the benefit under this scheme, according to the officials.