Budget 2024 offers relief to taxpayers who unintentionally failed to report certain low-value foreign assets under the Black Money Act.

A closer look at the finance bill reveals a dilution of the Act’s provisions for sections 42 and 43. The new amendments, effective from October 1, 2024, exempt these sections from applying to movable foreign assets (excluding immovable property) with a total value not exceeding ₹20 lakh.

Previously, the Black Money Act imposed a flat penalty of ₹10 lakh for non-disclosure of any foreign asset, regardless of its value. This posed a significant burden for taxpayers who might have inadvertently missed reporting minor holdings abroad.

Finance minister Nirmala Sitharaman, in her budget speech, acknowledged the challenges faced by Indian professionals working overseas. These individuals often receive Employee Stock Option Plans (ESOPs) and invest in social security schemes, resulting in small movable assets abroad. The non-reporting of such assets previously triggered penalties under the Black Money Act.

The revised threshold of ₹20 lakh is expected to provide significant relief to these taxpayers.

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, aimed to crack down on black money held overseas. Sections 42 and 43 specifically addressed the non-disclosure of foreign income and assets in tax returns.

Section 42 applied to resident taxpayers (excluding those not ordinarily resident) who failed to file income tax returns while holding foreign assets or deriving income from foreign sources.

Similarly, Section 43 penalized residents for failing to disclose details of any foreign asset or income in their tax returns.