The Black Money Act and Schedule FA
Disclosing foreign assets, the penalty for not, and the small-holding relaxation
The Black Money Act 2015 taxes undisclosed foreign income and assets of residents at a flat 30% (no deductions, exemptions or set-off), with a penalty of three times the tax, and it penalises the asset itself, not just income: failing to disclose a foreign asset or income carries a penalty of Rs 10 lakh per year. The practical compliance point is Schedule FA in your return: an Ordinarily Resident must disclose all foreign assets held at any time in the calendar year, even a zero-balance account or an unvested RSU plan, regardless of whether they earned anything. Since 1 October 2024, a relaxation means small foreign assets under Rs 20 lakh (excluding immovable property) escape the penalty, but you must still disclose them.
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How the Black Money Act works
The Black Money Act applies to undisclosed foreign income and assets of a resident, taxing them at a flat 30% with no deductions, exemptions or set-off, plus a penalty of three times the tax (an effective burden of around 120%), and wilful evasion can bring prosecution. There is no current amnesty (the one-time 2015 compliance window is long closed), and pre-2015 foreign assets are not grandfathered, they are taxable when detected. The obligation continues for as long as the asset exists and you are resident. FATCA and CRS information-sharing means foreign accounts are increasingly visible to the department, so non-disclosure is a real risk.
Schedule FA: disclose every foreign asset
The compliance mechanism is Schedule FA in the income-tax return. An Ordinarily Resident must disclose all foreign assets held at any time during the calendar year (1 January to 31 December), even if they produced no income, foreign bank and custodial accounts (including crypto-exchange accounts), foreign shares, ESOP and RSU holdings, immovable property, signing authority on foreign accounts, foreign trusts, and other foreign income. Disclosure is not the same as taxability: you may owe no extra tax but must still report. The penalty under the Black Money Act is for the asset, so even a dormant or zero-balance foreign account must be disclosed.
warningSchedule FA penalises non-disclosure of the asset itself (Rs 10 lakh a year), regardless of income. A forgotten foreign student account, an old RSU plan or a small overseas brokerage all need disclosing once you are Ordinarily Resident, the tribunal has upheld penalties for omitting them.
The Rs 20 lakh relaxation
There is one welcome easing. From 1 October 2024, a relaxation raised the threshold so that there is no penalty under the relevant provisions where a person's aggregate foreign assets (other than immovable property) are below Rs 20 lakh (up from Rs 5 lakh), with related prosecution relief. This protects someone with a modest foreign holding, an old student account or a small RSU position, from the harsh Rs 10 lakh penalty. But the relaxation is about the penalty, not the disclosure: you must still report the asset in Schedule FA. Disclose first; the relaxation then shields a small holding from the penalty.
tipThe Rs 20 lakh relaxation removes the penalty for small non-property foreign holdings, but it does not remove the duty to disclose. Always report the asset in Schedule FA; the relaxation then protects you from the penalty if the aggregate is under Rs 20 lakh.
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Source / notes
- Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 (flat 30% + 3x penalty; Rs 10 lakh disclosure-failure penalty)
- Schedule FA (foreign-asset disclosure for Ordinarily Residents; calendar-year reporting)
- FA (No. 2) Act 2024 (penalty relaxation: no penalty where non-immovable foreign assets under Rs 20 lakh, from 1 October 2024)
Frequently asked questions
Do I have to disclose foreign assets that earned no income?+
Yes, if you are Ordinarily Resident. Schedule FA requires disclosure of all foreign assets held at any time in the calendar year, regardless of income, foreign bank and brokerage accounts, shares, ESOP and RSU holdings, property, signing authority and trusts. The Black Money Act penalises the asset, not just income, so even a zero-balance or dormant foreign account must be disclosed.
What is the penalty for not disclosing a foreign asset?+
Under the Black Money Act, failing to disclose a foreign asset or income, or furnishing inaccurate particulars, carries a penalty of Rs 10 lakh per year, separate from the tax (a flat 30%) and the three-times-tax penalty on undisclosed income itself. Since 1 October 2024, small non-immovable foreign assets under Rs 20 lakh in aggregate escape this penalty, but disclosure is still required.
Is there an amnesty for old undisclosed foreign assets?+
No. The one-time compliance window under the Black Money Act in 2015 is long closed, and there is no current amnesty. Pre-2015 foreign assets are not grandfathered, they are taxable when detected. With FATCA and CRS information-sharing making foreign accounts increasingly visible, the realistic course is to disclose correctly going forward and take advice on any historic non-disclosure.
Does the Rs 20 lakh relaxation mean I do not need to report small foreign assets?+
No, it only removes the penalty, not the disclosure duty. From 1 October 2024, there is no penalty where your aggregate foreign assets other than immovable property are under Rs 20 lakh, which protects modest holdings like an old student account or small RSU position. But you must still disclose the asset in Schedule FA; the relaxation then shields you from the penalty.
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