The Income Tax Department has introduced significant relief for taxpayers holding small-value foreign assets, easing the strict provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA).
According to fresh instructions issued by the Central Board of Direct Taxes (CBDT), individuals will not face penalties or prosecution under certain conditions if the total value of undisclosed foreign assets, excluding immovable property, does not exceed ₹20 lakh in a financial year.
Key Change
CBDT has clarified that prosecution under Sections 49 and 50 of the BMA will not be initiated in cases where penalty under Sections 42 and 43 is not imposed. This means that taxpayers with small-value undisclosed foreign assets will be spared from harsh consequences, provided the value remains within the revised threshold.
The relaxation follows the Finance (No. 2) Act, 2024, which raised the exemption threshold from ₹5 lakh to ₹20 lakh, offering broader relief to globally mobile taxpayers.
Wider Coverage of Assets
The enhanced limit is particularly relevant for salaried professionals, NRIs, and individuals with global financial exposure.
“The increase from ₹5 lakh to ₹20 lakh offers substantial relief, especially for those holding foreign bank accounts, ESOPs, mutual funds, or pension assets,” said Niyati Shah, chartered accountant and vertical head – personal tax at 1 Finance. However, she clarified that immovable property held abroad continues to remain outside the scope of this relaxation.
Compliance and Safeguards
Tax experts believe the higher limit will reduce compliance burdens and curb unnecessary litigation in cases of minor or unintentional lapses.
“This step will significantly cut compliance stress and prevent minor disputes over inadvertent non-disclosures,” Shah explained.
Concerns about misuse by artificially splitting assets were addressed, with CBDT making it clear that the ₹20 lakh cap applies to the aggregate peak value of all foreign assets in a year. Any deliberate concealment or structuring will still attract penalties and prosecution.
Policy Intent
According to experts, the change reflects a pragmatic policy approach.
“This move signals that the government wants to concentrate its enforcement on large-scale, deliberate black money cases, rather than penalising taxpayers for small oversights,” Shah noted.
However, experts caution that this should not be viewed as a relaxation in reporting requirements. Foreign assets must still be declared in income tax returns, and non-disclosure beyond the threshold will continue to trigger strict consequences.
Why It Matters
By raising the threshold and extending relief to a wider set of financial assets, the government aims to ease compliance anxiety for ordinary taxpayers, while ensuring that enforcement under the BMA remains focused on serious tax evasion and black money violations.
