The Central Board of Direct Taxes (CBDT) has released Instruction No. 01/2025, dated 18 August 2025, easing compliance requirements under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The move brings relief to taxpayers holding minor undisclosed foreign assets by clarifying that prosecution will not apply where penalty provisions are not attracted.
💢 Background: Why the Black Money Act Exists
The Black Money Act, 2015 was enacted to tackle the problem of undisclosed overseas income and assets. It provides for tax, penalties, and prosecution in cases of serious violations.
Earlier, CBDT had issued guidelines on 15 March 2022, stating that if no penalty was imposed under Sections 42 or 43, then no prosecution under Sections 49 or 50 should be initiated. However, this relaxation was initially limited only to undisclosed foreign bank accounts up to ₹5 lakh.
☑️ Key Legislative Change
The Finance (No. 2) Act, 2024, effective 1 October 2024, expanded the relief threshold. Under the amendment, foreign assets (other than immovable property) valued up to ₹20 lakh in aggregate are exempt from penalties under Sections 42 and 43. This widened the scope from just bank accounts to include all categories of non-immovable foreign assets.
🎲 What the New CBDT Instruction Says
The latest CBDT directive (Instruction No. 01/2025) clarifies that:
- If no penalty is levied under Sections 42 and 43 (as amended), then no prosecution will be initiated under Sections 49 and 50.
- This applies specifically to foreign assets other than immovable property, up to the threshold of ₹20 lakh.
🚹 Impact on Taxpayers
- ✅ Undisclosed foreign assets (excluding property) up to ₹20 lakh → No penalty under Sections 42/43 and no prosecution under Sections 49/50.
- ❌ Undisclosed foreign assets above ₹20 lakh → Normal penalties and prosecution provisions will apply.
- 🏠 Undisclosed foreign immovable property (any value) → Penalty and prosecution remain applicable.
🛄 Why This Change Matters
- Relief for genuine taxpayers: Small, inadvertent omissions of overseas assets will not attract harsh penalties or prosecution.
- Policy consistency: The instruction aligns with the 2024 amendment, ensuring clarity in enforcement.
- Focus on serious violations: The threshold allows authorities to concentrate on significant black money cases while ignoring minor, unintentional lapses.
👉 In short, the CBDT’s 2025 guidelines provide welcome relief to individuals with low-value undisclosed foreign assets, while continuing to hold serious offenders accountable under the Black Money Act.