Enacted in 2015, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act was introduced by the Indian Parliament to curb “black money”, particularly undisclosed foreign income and assets held by Indian residents. The Act primarily targets foreign income and assets that remain undisclosed to Indian tax authorities. Given the cross-border nature of black money, a robust legal and administrative framework is essential to address its global footprint. The Act came into effect on 1st April 2016.
In India, black money has traditionally appeared as unreported income held in cash, invested in benami properties, or parked in undisclosed foreign bank accounts.
The main objectives of the Act are to:
- Mandatory disclosure for all foreign income and assets by residents, including details of beneficial ownership.
- Levy of tax, penalties, and in certain cases, prosecution for failure to disclose, furnishing inaccurate information, or attempting tax evasion through concealment.
- Empowering the government to utilize international information exchange mechanisms to trace foreign assets of Indian residents.
Sections 42 and 43 deal with failure to disclose foreign income or assets, or with furnishing inaccurate particulars, and prescribe penalties for such defaults. Sections 49 and 50 address prosecution in cases of non-disclosure or false disclosure, particularly where penalties are imposed or are imposable.
Data reveals that over the past 10 years, demands raised (including interest and penalties) have amounted to ₹35,105 crores, while actual recoveries stand much lower at only ₹338 crores. This indicates that although demand notices and assessments are being issued, actual recoveries and prosecutions remain weak largely due to challenges such as evidence, collection, prolonged litigation, and the complexities of tracing international assets.
In the past, certain amendments were introduced to provide relief, particularly to reduce the burden or penal consequences for taxpayers in case of minor or bona fide/inadvertent non-disclosures.
To address this, the CBDT has revised its instructions to align with the updated statutory provisions.
Following the legislative amendments, the government issued instructions to clarify the practical application of the new rules.
As per CBDT Instruction dated 18th August 2025 (F. No. 285/46/2021-IT), prosecution under Sections 49 and 50 shall not be initiated for foreign movable assets whose aggregate value does not exceed ₹20 lakhs during the relevant previous year, provided that penalty under Sections 42 and/or 43 has not been imposed or is not imposable.
This instruction provides relief to individuals holding minor undisclosed foreign movable assets valued up to ₹20 lakhs, exempting them from penalties and prosecution in appropriate cases, while immovable properties excluded from such relief.
The increase of the threshold for movable foreign assets from ₹5 lakhs to ₹20 lakhs provides relief to taxpayers who may have unintentionally or negligently failed to disclose smaller assets abroad, exempting them from penalties and prosecution. This revision ensures consistency and prevents unnecessary legal action in cases where the law does not envisage penal consequences. Additionally, the amendment helps the administration reduce unwarranted penalties, prosecutions, and litigation related to minor assets, thereby easing the burden on courts & tribunals. However, the law continues to require disclosure of all foreign income and assets. Even if the assets are below ₹20 lakhs, reporting remains mandatory, the principle of transparency. Compliance not only avoids penalties but also strengthens trust in the financial system.