What the notice is, and why it landed
The notice is issued under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 — a separate, stricter law from the ordinary Income-tax Act. It is asking about a foreign asset that does not appear in your Indian return: a bank account abroad, an overseas brokerage or investment, a foreign pension, or property outside India.
What usually set it off is not a tip-off — it is automatic data. India is part of the Common Reporting Standard (CRS) and has a FATCA agreement with the United States. Under these, banks abroad report their account holders to their own tax authority, which passes the details to India every year. When that foreign account shows against your name but never appeared in Schedule FA of your return, the mismatch is flagged and a notice or summons follows.
So the notice is built on information India already has. That matters two ways. You cannot make the account disappear — denying it is the wrong move. But the data only shows the account exists; it does not, on its own, show that the Act applies to you. That is the question the reply turns on.
The first defence — was the Act ever yours to answer? (residential status)
This is the point that decides most NRI cases, so it comes first. The Black Money Act charges an "assessee" — and that is defined by residential status. The Act bites on a person who was Resident and Ordinarily Resident (ROR) for the relevant year. A genuine non-resident, or a Resident but Not Ordinarily Resident (RNOR), is generally outside the Act for a foreign asset (Section 2(2) BMA, read with Section 6 of the Income-tax Act).
The logic is simple. A non-resident's foreign income and foreign assets are not within India's tax net in the first place, and there is no Schedule FA duty on them. If you were a non-resident in the year the notice covers, there was nothing you were required to disclose — so the foundation of the notice is missing.
There is one real catch, added by the Finance (No. 2) Act 2019, and it must be checked honestly: the Act also reaches a person who is non-resident or RNOR now but who was ROR in the year the foreign asset was acquired (or the foreign income earned). You cannot escape by simply changing status after the fact. So the defence is not "I am an NRI today" — it is "I was non-resident, or the asset was acquired while I was non-resident."
| Your status when the asset was acquired / income arose | The Act's reach |
|---|---|
| Non-resident or RNOR throughout | Generally outside the Act — foreign asset was never India's to tax |
| ROR then, non-resident now | Still within the Act — the 2019 amendment keeps you liable |
| ROR in the year the notice covers | Within the Act — this is the case to defend on the merits |
Establishing status is therefore the first job, not an afterthought. It is reconstructed year by year from your days in India, your passport stamps, and your employment abroad — and where it holds, the notice is answered on that ground alone.
If the Act does apply — what is actually at stake
Where you were ROR for the relevant year and the foreign asset was genuinely undisclosed, the consequences are heavy, and it is better to know them plainly than to be surprised.
The charge is a flat 30% on the value of the undisclosed foreign asset or income. There is no basic exemption, no deduction, and no set-off of losses — the 30% applies to the full value, not to a gain (Section 10 BMA). On top of the tax, a penalty of three times the tax is commonly levied (Section 41) — so tax plus penalty together can reach roughly 120% of the asset's value.
Separately from the tax, there is a flat penalty of ₹10 lakh for failing to disclose a foreign asset in the return, or for not filing a return while holding one (Sections 42 and 43). A narrow relief exists: this flat penalty does not apply to a foreign bank account where the total balance stays below ₹5 lakh at all times in the year.
| Consequence | What it is |
|---|---|
| Tax | Flat 30% of the asset's value — no exemption, no deduction |
| Penalty | Commonly 3x the tax (Section 41) |
| Non-disclosure penalty | Flat ₹10 lakh per year (Sections 42 / 43); small-balance bank accounts under ₹5 lakh are spared |
| Prosecution | Reserved for wilful concealment (Sections 50 / 51) — not a routine, unintended omission |
Prosecution is the part people fear most, and it is worth being precise: it is reserved for wilful evasion or wilful failure to disclose (Sections 50 and 51). An asset you genuinely overlooked, or one that was disclosed late and explained, is a different matter from money deliberately hidden. The aim of a good reply is to keep the case in the civil lane, not the criminal one.
How a reply is built — status, source, and the route that fits
A reply is not an argument; it is a reconstruction backed by documents, and it runs in order.
First, residential status for the relevant year and the year of acquisition — built from your days in India, passport and visa records, and proof of employment or residence abroad. If this shows you were non-resident, it is the whole answer, and the rest is support.
Second, the source and history of the asset — where the money came from. A foreign account funded entirely from salary you earned abroad as a non-resident is foreign-source income that was never India's to tax. Inheritance, a gift, or proceeds already taxed in the country where you live each have their own clean explanation. Any foreign tax already paid on the income is gathered too.
Third, the right route if you were in fact ROR and genuinely missed it. The Act is a notice-defence statute, but the income side is often corrected through the regular return — a revised or updated return that brings the asset into Schedule FA and offers any income to tax. Voluntary correction before the position hardens is always treated better than a contested concealment. (Note that this is different from the formal one-time voluntary disclosure window the Act opened in 2015, which is long closed — what is meant here is putting your ordinary return right.)
The thread through all three is the same: answer with records, not assertions, and pick the lane — status defence, clean-source explanation, or correction — that the actual facts support.