Black Money Act: No penalty/ prosecution for minor-value foreign assets

The Central Board of Direct Taxes (CBDT) has recently issued a new instruction [F. No. 285/46/2021-IT(Inv.V)/88], dated August 18, 2025, notifying amendments in an earlier instruction dated 15.03.2022, issued under Section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“BMA, 2015”) read with Section 119 of the Income-tax Act, 1961, relating to prosecution under Sections 49 and 50 of the BMA. This law is meant to catch and punish people who hide money or assets in foreign countries and do not report them in India.

Previously, CBDT issued an instruction [F.No.285/46/2021/IT (Inv.V)/645], dated March 15, 2022, that stated if someone owns any foreign bank accounts with a total balance of less than Rs. 5 lakh at any time during the year, and they did not report these, then they will not be liable to any penalty amount under Section 42 or 43 of the BMA 2015. Additionally, no prosecution will be initiated under Section 49 or 50 of the BMA. This rule was made to protect individuals who missed reporting small-value foreign bank accounts accidentally or out of ignorance. The key reason behind this move is to ensure no harsh punishment for small errors or mistakes.

However, in 2024, the Government of India made the Finance (No. 2) Act of 2024, which took effect on October 1, 2024, and made amendments to the BMA law. In these changes, the limit of Rs. 5 lakh was increased to Rs. 20 lakh. Additionally, expand the coverings to include all foreign assets except immovable property, not merely the bank accounts. Hence, after the effect of the rule, anyone caught misreporting any of the designated foreign assets with a total value up to Rs. 20 lakh was liable to be penalised under Section 42 or 43 of the BMA.

The Central Board of Direct Taxes (CBDT) has now recently again made amendments in the 2022 Instruction vide the latest Instruction dated August 15, 2025, which states prosecution under Sections 49 and 50 of BMA, 2015, shall also NOT be initiated if the asset is not an immovable property that has a total value less than or equal to Rs. 20 lakh at any time during the relevant previous year, and if the penalty under Section 42 and/or 43 is not imposed or not imposable (as per the new amendment). These amendments have been made in accordance with the updated penalty rules introduced by the Finance (No.2) Act, 2024, which became effective on October 1, 2024.

In simpler words, if you had a foreign asset (not an immovable property) worth less than Rs 20 lakh and you forgot to report it, then you will neither be liable to pay a penalty on it nor face prosecution, provided it happened on or after October 1, 2024.

Refer to the official instruction for complete information.