The ₹20 lakh Black Money Act threshold: what it removes, and what it leaves in place

Short answer: since 1 October 2024, the Black Money Act's ₹10 lakh penalties for leaving foreign assets out of a return (sections 42 and 43) do not apply to assets other than immovable property with an aggregate value not exceeding ₹20 lakh. The Finance Act, 2026 extended the same limit to the prosecution provisions (sections 49 and 50), with retrospective effect from that date. The threshold does not remove the duty to report in Schedule FA, the income tax on the foreign income, or the 30% tax and 90% penalty on a foreign asset whose source you cannot explain.

For many people who received the department's foreign-assets email in the last few days, that is the difference between a ₹10 lakh exposure and a return correction.

Why this is being asked now

Since around 24 September 2026 the Income Tax Department has been emailing taxpayers that its records indicate they "may have overseas financial interests". The message points to the Foreign Assets Information now shown in the Annual Information Statement (AIS), the department's consolidated record of what third parties have reported about you, and to FAST-DS, the foreign assets disclosure scheme open until 31 December 2026. What the email is, and how to read it, is covered in the overseas financial interests email.

Many recipients hold small balances: vested RSUs, a savings account left open after a posting abroad, a small pension pot. The ₹20 lakh threshold is most of the answer to whether they need to act, but it is narrower than usually described.

What the proviso says, and where it sits

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Black Money Act) has four provisions aimed at reporting failures by residents. Each applies only to a person who is resident and ordinarily resident (ROR) in India for the year; years in which you were non-resident or not ordinarily resident are outside them altogether.

The wording is the same in all four:

this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees.

Before the 2024 amendment, sections 42 and 43 excluded only bank accounts with an aggregate balance of up to ₹5 lakh at any time during the year; brokerage accounts, shares and pension funds had no floor. For prosecution, the Central Board of Direct Taxes (CBDT) first aligned its practice by an instruction of 18 August 2025, directing that prosecution under sections 49 and 50 not be started where the section 42 or 43 penalty was not imposable. The Finance Act, 2026 then put the limit into the statute.

Two details matter. Section 42 applies only if the return is not filed before the end of the relevant assessment year, so a late return filed within that year avoids it regardless of value. And section 43 bites on a return furnished under section 139(1), (4) or (5) of the Income-tax Act, 1961: the original, belated and revised returns. That is why a revised return cures a Schedule FA omission and an updated return does not.

What "aggregate value" means: unsettled

This is the part most summaries skip, and it is the part that decides borderline cases.

The proviso says "aggregate value" and nothing more. It does not give a date, a method or a currency rule for assets other than bank accounts. The possible readings:

The Explanation to section 42 adds a currency rule for foreign bank balances: the State Bank of India telegraphic transfer buying rate "as on the date for which the value is to be determined". That date is not stated anywhere, because the Explanation was written for the old proviso.

No binding ruling or circular settles this. The practical approach is to test the highest aggregate value of all your foreign assets other than immovable property at any point in the Indian financial year (April to March, the Act's "previous year"), converted at the SBI TT buying rate. Schedule FA already asks for peak values, so the figures usually exist. If you are under ₹20 lakh on one measure and over on another, plan as though you are over.

A related open point is what goes into the aggregate. The safer reading counts every foreign asset other than immovable property that you held, not only the one left out. Someone who reported a ₹30 lakh brokerage account and forgot a ₹2 lakh savings account should not assume the ₹2 lakh account is covered.

How a bank account is valued under FAST-DS, and why it differs from the balance, is set out in how a foreign bank account is valued under FAST-DS.

From when: 1 October 2024, and the argument about earlier years

A return furnished on or after 1 October 2024 is plainly within the new proviso. In practice that is the return for FY 2024-25 (AY 2025-26) onwards, plus any belated or revised return for an earlier year filed after that date.

For returns filed before 1 October 2024, the position is arguable, not settled. The penalty amendment is prospective on its face, and the prosecution amendment was made retrospective only to the same date, not earlier. Against that, the Supreme Court in CIT v. Vatika Township (2014) accepted that a provision conferring a benefit on the taxpayer can be read as applying to past periods, and a penalty order passed today on an old default is being passed under today's law. No appellate ruling on the ₹20 lakh point has been found. Take a considered view for the specific year rather than assuming it either way.

What the threshold removes, and what it does not

Reporting. Schedule FA is part of the income-tax return, not the Black Money Act. A resident and ordinarily resident individual reports every foreign asset held during the relevant period, with no minimum value, and a proviso to section 139(1) of the 1961 Act requires a return because of the foreign asset even where income is below the taxable limit (from tax year 2026-27 the return provisions sit in section 263 of the 2025 Act). The threshold changes the cost of an omission, not whether it is one.

Tax on the income. Dividends, interest and gains from abroad are taxable in India for a resident. The threshold does not reach them.

Tax on the asset itself. Sections 3 and 41 tax an "undisclosed asset located outside India", which section 2(11) defines as one whose source of investment you cannot explain satisfactorily: 30% of value plus a penalty of three times the tax, 120% in all, with no ₹20 lakh floor. Shares that vested as salary and were taxed through Form 16 have an explained source; a foreign account funded by money that never passed through an Indian return may not.

Why property is excluded. The proviso carves it out without giving a reason. The evident logic is that the relief targets small financial holdings, not foreign real estate, which is rarely small and rarely forgotten. A flat abroad is outside the threshold at any value, and does not count towards the ₹20 lakh either.

Worked examples

All figures are the highest aggregate value during the year, for a resident and ordinarily resident individual, for returns filed after 1 October 2024.

Source still matters. If the savings account in the first example holds money whose origin you cannot document, the threshold protects you from section 43 but not from sections 3 and 41.

How the threshold fits with FAST-DS

FAST-DS settles an undisclosed foreign asset at 60% of value (Entry 1, where the aggregate is up to ₹1 crore) or at a flat ₹1,00,000 (Entry 2, for an asset funded from income already taxed or earned while non-resident, up to ₹5 crore). The full mechanics are in the FAST-DS 2026 guide.

For someone under ₹20 lakh, the question is what FAST-DS would be buying:

• If the only exposure was the section 43 penalty, and every affected return was filed after 1 October 2024, the threshold has already removed it. FAST-DS is usually unnecessary. What remains is the income: correct it through a revised return (section 139(5) of the 1961 Act, available for AY 2026-27 up to 31 March 2027, with a fee under section 234-I for revising late in that window) or an updated return (section 139(8A)), and add Schedule FA.
• If earlier years are involved, the threshold's reach is arguable. Entry 2 at ₹1,00,000 buys certainty on the penalty for those years, against a ₹10 lakh per-year exposure if the argument fails.
• If the source of the asset cannot be explained, the threshold does nothing about the 120%. That is Entry 1 territory.

A FAST-DS declaration is final and the amount is not refundable, so it should not be used where a revised return does the job. The choice, year by year, is worked through in revised return, ITR-U or FAST-DS.

If you got the email and are under ₹20 lakh

1. Open AIS and read the Foreign Assets Information. Check it against your own records. If something is wrong, such as an account you do not hold or one closed before the year, say so through AIS feedback rather than leaving it; see responding to Foreign Assets Information in AIS.
2. List every foreign asset for every year you were resident and ordinarily resident, with its highest value in each Indian financial year, including old salary accounts, small pension balances and share-plan accounts.
3. Work out the aggregate on the cautious measure above, with full statement histories for old bank accounts.
4. Separate the years: returns filed on or after 1 October 2024, and returns filed before.
5. Correct the income. Unreported dividends, interest or gains are taxable regardless of the threshold, with foreign tax credit where tax was paid abroad.
6. Correct Schedule FA for AY 2026-27 by revised return while that window is open.
7. Keep the working papers: a valuation schedule showing you were under ₹20 lakh on a defensible basis, with the statements behind it.

For RSU and ESOP holders, the reporting and tax side is covered on the foreign income, RSU and ESOP filing page.

This note sets out the ₹20 lakh proviso to sections 42, 43, 49 and 50 of the Black Money Act, 2015 as it stands on the date above, taken from the section text published by the Income Tax Department. It is not advice on any individual's position. How "aggregate value" is measured, and whether the threshold reaches returns filed before 1 October 2024, are not settled by statute, rule or appellate ruling; confirm the current position, and your residential status for each year, before relying on the threshold or deciding against FAST-DS.