Income Tax Return Update: No Jail for Not Reporting Foreign Assets Up to ₹20 Lakh Value, Says CBDT

In a major relief for taxpayers, the Central Board of Direct Taxes (CBDT) has clarified that individuals who fail to disclose foreign assets worth up to ₹20 lakh will no longer face prosecution under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015. The announcement, made through a circular issued on August 20, 2025, marks a significant relaxation in compliance norms and is expected to ease concerns of many taxpayers with small overseas holdings.

What Has Changed?

Until the financial year 2023-24, non-disclosure of foreign assets in Income Tax Returns (ITR) invited strict penalties. Taxpayers could be fined up to ₹10 lakh and even face imprisonment ranging from six months to seven years under Sections 42 and 43 of the Black Money Act.

However, under the new guidelines, if a taxpayer forgets to disclose foreign assets whose total value does not exceed ₹20 lakh, no prosecution will be initiated. This relaxation is aimed at reducing litigation and providing relief to individuals with low-value overseas assets.

Details of the CBDT Circular

The CBDT circular clearly states:

• Non-disclosure of foreign assets valued up to ₹20 lakh in a financial year will not attract penalties or legal proceedings under Section 42 and/or Section 43 of the Black Money Act.

• The move is intended to provide clarity and reduce compliance burden, especially for taxpayers with minor foreign holdings such as small bank accounts, deposits, or investments.

• The relaxation will not apply to immovable properties such as real estate.

Chartered Accountants’ Perspective

Tax experts have welcomed the circular, noting that earlier provisions were often seen as excessive in cases involving small-value foreign assets.

Himank Singla, Partner at SBHS Associates, explained:

“Earlier, action under Sections 42/43 was generally not initiated where the total balance in overseas bank accounts exceeded ₹5 lakh in a financial year. Now, by officially raising the non-prosecution limit to ₹20 lakh, the CBDT has provided much-needed clarity. This is particularly helpful for employees of multinational companies who often maintain small balances abroad during their foreign postings.”

Budget Relief and Previous Provisions

This relaxation follows the announcement made in the July 2024 Union Budget by Finance Minister Nirmala Sitharaman. At that time, the government had proposed that starting FY25, taxpayers would not be penalized for failing to disclose overseas assets valued up to ₹20 lakh.

Before this, non-disclosure of any foreign asset — regardless of value — triggered a penalty of ₹10 lakh along with possible imprisonment under the Black Money Act.

Exemption Does Not Cover Real Estate

While the new circular brings relief for many, there is one important caveat. Immovable assets such as property or land located abroad are not covered under this relaxation. Taxpayers holding such assets must continue to report them in their ITRs, regardless of value.

Why This Matters for Taxpayers

• Reduced Compliance Burden: Many taxpayers forget to declare small overseas assets such as savings accounts, especially if they were temporarily posted abroad. The new rule removes the fear of harsh punishment in such cases.

• Encouragement for Transparency: By offering relief for low-value assets, the government hopes to encourage voluntary compliance and reduce unnecessary litigation.

• Focus on Big Cases: The move allows tax authorities to focus their resources on high-value and willful tax evasion cases instead of penalizing minor lapses.

Key Takeaways for Individuals

1. Non-disclosure of foreign assets up to ₹20 lakh will not attract jail or penalty under the Black Money Act.

2. Disclosure is still mandatory, but missing out on low-value assets will no longer be treated as a serious offense.

3. The exemption does not apply to immovable property abroad.

4. Taxpayers should continue to maintain transparency in reporting all high-value foreign holdings.

Conclusion

The CBDT’s latest circular provides much-needed clarity and relief for taxpayers with small foreign assets. By setting a ₹20 lakh threshold for non-disclosure, the government has struck a balance between easing compliance for honest taxpayers and maintaining strict action against serious tax evasion. Individuals should, however, remain vigilant in reporting larger overseas assets to avoid penalties and legal consequences.