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. Since the Finance (No. 2) Act 2019, which applies back to 1 July 2015, it reaches a person who was resident in India in the year the foreign income arose or in the year the foreign asset was acquired (Section 2(2) BMA, read with Section 6 of the Income-tax Act). A genuine non-resident in that year is outside the Act for that foreign asset.
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 and in the year the asset was acquired, there was nothing you were required to disclose, so the foundation of the notice is missing.
There is one real catch, and it must be checked honestly: the Act also reaches a person who is non-resident or RNOR now but who was resident 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."
One date rule changes this test for older assets. If the asset was acquired before 1 July 2015 and not declared in the 2015 window, the Act treats it as acquired in the year the notice was issued (Section 72(c) BMA). For such an asset, your status in the notice year is what counts, not your status when you actually bought it.
| Your status when the asset was acquired / income arose | The Act's reach |
|---|---|
| Non-resident throughout | Generally outside the Act, foreign asset was never India's to tax |
| RNOR in that year | The Act may still be argued to apply, but an RNOR has no Schedule FA duty, and the ₹10 lakh penalty and the return-related prosecution (Sections 49 and 50) reach only an ROR. A CA assesses this on your facts |
| Resident 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 the Act does apply to you 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 (Sections 3 and 5 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). It applies only to a year in which you were ROR. There is a relief: from 1 October 2024 this flat penalty does not apply where your foreign assets, other than immovable property, add up to no more than ₹20 lakh (Finance (No. 2) Act 2024). This relief does not remove the 30% tax on an undisclosed asset. Before that date the relief was narrower, covering only bank accounts with a total balance of up to ₹5 lakh.
| 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), ROR years only; from 1 October 2024 not where foreign assets other than immovable property total ₹20 lakh or less |
| Prosecution | Reserved for wilful conduct (Sections 49 / 50 / 51); from 1 October 2024 Sections 49 and 50 do not apply where foreign assets other than immovable property total ₹20 lakh or less |
Prosecution is the part people fear most, and it is worth being precise: it is reserved for wilful conduct: wilfully not filing a return while holding a foreign asset (Section 49), wilfully not disclosing it in a return (Section 50), or wilful evasion (Section 51). From 1 October 2024, Sections 49 and 50 do not apply where your foreign assets, other than immovable property, total ₹20 lakh or less (Finance Act 2026, applied back to that date); that limit does not cover wilful evasion under Section 51. Above it, Sections 49 and 50 can apply, and under Section 54 of the Black Money Act the court presumes a culpable mental state, so the burden is on you to show the omission was not wilful. Clean records are what do that. 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 return (only while its deadline is still open) or an 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 a formal disclosure scheme. The window the Act opened in 2015 is long closed, but a separate one is open now: FAST-DS 2026 takes declarations until 31 December 2026, and for a small undisclosed foreign asset it is usually the better route than a quiet correction. 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.