Black Money Act amendment to remove penalty on non-disclosure of foreign assets worth Rs 20 lakh

Black Money Act amendments in Section 42 and 43 will be a part of the Finance Bill.

An amendment in the Black Money Act will give taxpayers relief from penalty in case they fail to disclose overseas assets worth Rs 20 lakh, Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal said, adding that however the obligation to report the transanction is not done away with.

The Black Money Act amendments in Section 42 and 43 will be a part of the Finance Bill.

Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 aims to curb black money, or undisclosed foreign assets and income and imposes tax and penalty on such income. Currently under the Act, even if the taxpayers fail to disclose a foreign asset worth Rs 5 lakh, they have to pay a Rs 10 lakh penalty on it.

“At present if the taxpayer is holding any asset abroad, which is not declared in the income tax return then there is a penalty of Rs 10 lakh. An amendment in the Black Money Act is proposed that If the value of the overseas asset is up to Rs 20 lakh, and is not disclosed, there will be no penalty if it's a bonafide mistake on the part of the taxpayer,” Agarwal told Moneycontrol in an interview.

However, it does not mean that the obligation to actually report a transaction has been done away with. It should not be interpreted that way. The penalty has been removed, does not mean that the obligation has also been removed, he added.

“The amendment is proposed as the income tax department presumes there may not be a malafide intention to hide it. So in such bonafide mistakes the person should not be subjected to penalty,” the CBDT chairman said.