The Black Money Act Just Got Less Scary for Returning NRIs.
TL;DR
Movable foreign assets under ₹20 lakh no longer trigger penalty proceedings under Section 42 of the Black Money Act. Up from ₹5 lakh. A small rule change with a big impact on anyone moving back to India with overseas savings.
By Vipul Sharma, Founder
Reviewed by Preetesh Maloo, Chartered Accountant, NRI Tax Partner
What actually changed?
For years the Black Money Act was the scariest law facing a returning NRI: a flat 30% tax on undisclosed foreign assets, a penalty up to three times the tax, and criminal prosecution for wilful concealment.
Here's the relief. From 1 October 2024, the Finance (No. 2) Act 2024 raised the small-asset threshold. If your total movable foreign assets stay under ₹20 lakh, the Section 42/43 penalty for missing them on Schedule FA no longer gets triggered. It used to be just ₹5 lakh, and only covered foreign bank balances; the 2024 change both raised the ceiling and widened it to all movable assets.
Movable means bank balances, brokerage accounts, small investments, and retirement accounts. Immovable property is different: a house in Dubai or a flat in London still has to be disclosed in Schedule FA, whatever it is worth.
Old threshold (bank accounts only)
₹5 lakh
New threshold (1 Oct 2024)
₹20 lakh
Penalty if you breach it
₹10 lakh
Who does this actually help?
Three groups can breathe easier.
Moving back with overseas savings?
Send us your list of foreign accounts. We'll tell you exactly where you stand on Schedule FA and the ₹20 lakh line, before your first Resident return, so a small oversight never becomes a Black Money notice.
Senior CA who specialises in NRI tax · we deal with the tax officer, you don't
What does it NOT change?
This is a threshold change, not a free pass. Four things stay exactly as they were.
Disclose even the small accounts
The ₹20 lakh change only moves the penalty trigger. The legal duty to report every foreign asset in Schedule FA still stands. Disclosure is free; an asset the department later finds you left out is not.
How should you plan your move back?
Frequently asked questions
Q: What is the ₹20 lakh Black Money Act threshold?
A: From 1 October 2024, if your total movable foreign assets stay under ₹20 lakh, the Section 42/43 penalty for not disclosing them in Schedule FA is not triggered. It used to be ₹5 lakh, and only for bank balances.
Q: Does this mean I don't have to disclose foreign assets under ₹20 lakh?
A: No. You must still disclose every foreign asset in Schedule FA. Only the penalty trigger moved, not the duty to disclose.
Q: Is foreign property covered?
A: No. It covers only movable assets (bank, brokerage, retirement accounts). Immovable property abroad must be disclosed whatever its value.
Q: What is the penalty if I breach it?
A: A flat ₹10 lakh per asset left off a filed return (Section 43; not filing at all is Section 42), plus 30% tax and up to 90% penalty on undisclosed foreign income, plus possible prosecution.
Q: Does Schedule FA apply during my NRI or RNOR years?
A: No. It is for Resident and Ordinarily Resident filers. NRIs and RNORs are exempt. It switches on the year you become ROR.
Q: I already have a Section 42 or 43 notice. Does this cancel it?
A: Not automatically. Raise the new ₹20 lakh threshold in your reply and argue for withdrawal. Get a specialist; it is not DIY.
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The exceptions that change the answer
Where the general rule stops applying to you
Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.
Black Money Act penalty for non-disclosure of foreign assets
Right now: Rs 10 lakh flat, per year of default
Where it works differently
- Aggregate value of foreign assets (OTHER than immovable property) does not exceed Rs 20 lakh at any time in the year
- No penalty under s.42 or s.43.
- De minimis proviso, raised from Rs 5 lakh to Rs 20 lakh by the Finance (No. 2) Act 2024 with effect from 1 October 2024.
- The person is RNOR or non-resident
- Schedule FA does not apply, so no exposure.
- The obligation attaches to a resident and ordinarily resident.
- The foreign asset is immovable property
- The Rs 20 lakh carve-out does NOT apply.
- The proviso expressly excludes immovable property.
Commonly got wrong
- The de minimis threshold is Rs 5 lakh. Raised to Rs 20 lakh from 1 October 2024.Rs 20 lakh, excluding immovable property.
- NRIs must file Schedule FA. It applies to residents and ordinarily residents only.The obligation starts when you become ordinarily resident.
Schedule FA reporting period
Right now: The CALENDAR year ending during the relevant financial year, not the Indian financial year
Where it works differently
- Filing for FY 2025-26
- Schedule FA covers 1 January to 31 December 2025, a nine-month offset from the Indian tax year.
- The schedule is aligned to foreign reporting years so that CRS and FATCA data reconcile.
- An asset was held for even one day in that calendar year
- It is reportable. Closing the account before 31 March does not remove the obligation.
- 'At any time during' the period.
- The taxpayer is RNOR or non-resident
- Schedule FA does not apply at all.
- The duty attaches to a resident and ordinarily resident.
Commonly got wrong
- Schedule FA covers the Indian financial year. It covers the calendar year ending within that financial year.Schedule FA in the FY 2025-26 return covers 1 January to 31 December 2025, the calendar year, not the Indian financial year.
Black Money Act: tax and penalty on undisclosed foreign assets
Right now: 30% tax on the value, plus a penalty of three times the tax (90%), so 120% in total, plus prosecution
Where it works differently
- The taxpayer is RNOR or non-resident
- The Act does not reach them. Exposure begins on becoming ordinarily resident.
- The charge attaches to a resident.
- FAST-DS 2026 opens
- 60% all-in instead of 120%, with full immunity, for aggregate undisclosed assets up to Rs 1 crore. The commencement date is not yet notified.
- The FAST-DS 2026 terms are 60% in total, against 120% under the Black Money Act.
- The failure is only a Schedule FA omission in a filed return
- That is s.43, a flat Rs 10 lakh, not the 120% charge.
- Different section, different consequence.
Commonly got wrong
- Undisclosed foreign assets cost 30%. 30% is the tax. The penalty is three times that again, so the exposure is 120% of the asset value plus prosecution.30% tax plus a 90% penalty, 120% of the value, and prosecution of three to ten years.