The foreign asset is small and no penalty is proposed. Can they still prosecute me for leaving it out of Schedule FA?
Not on the Board's own instruction. It directs that prosecution under s.49 or s.50 of the Black Money Act is not to be initiated in cases where penalty under s.42 or s.43 is not imposed or not imposable because the asset falls within the proviso to those sections - assets other than immovable property whose aggregate value does not exceed Rs 20 lakh. It amends an earlier instruction of 15 March 2022.
Decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Investigation Division; signed by Ravi Verma, Deputy Director of Income Tax. Issued in exercise of the power under s.84 of the Black Money Act 2015 read with s.119 of the Income-tax Act 1961) on 2025-08-18, reported as F. No. 285/46/2021-IT(Inv. V)/88 dated 18 August 2025, amending F. No. 285/46/2021/IT (Inv.V)/645 dated 15 March 2022. It bears on section BMA s.49, section BMA s.50, section BMA s.42, section BMA s.43, section BMA s.84, section 119 of the Income Tax Act 1961, in Prosecution and Penalty matters.
Prosecution under this Act carries rigorous imprisonment of not less than six months, and the officer who levies the penalty is often the same officer who recommends the complaint. This instruction is binding on the department and it ties the prosecution decision to the penalty threshold, so a client whose foreign assets are inside the proviso can be told in writing that the Board's own direction is against a complaint. Parliament has since put the same threshold into ss.49 and 50 themselves, with retrospective effect from 1 October 2024.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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By Instruction F. No. 285/46/2021/IT (Inv.V)/645 of 15 March 2022 the Board had directed that prosecution under s.49 or s.50 of the Black Money Act was not to be initiated where penalty under s.42 or s.43 was not imposed or imposable in relation to assets covered by the proviso to those sections as they then stood - that is, one or more bank accounts with an aggregate balance not exceeding a value equivalent to Rs 5 lakh at any time during the previous year. The instruction records its own purpose: to protect individuals holding foreign accounts with minor balances that might not have been reported through oversight or ignorance, by providing that non-disclosure of such accounts would attract neither penalty nor prosecution. The Finance (No. 2) Act 2024 then substituted the proviso to ss.42 and 43 with effect from 1 October 2024, so that neither section applies to an asset or assets other than immovable property whose aggregate value does not exceed twenty lakh rupees. The instruction records that this widened the class of assets outside the penalty sections while the 2022 instruction continued to give protection from prosecution only for the narrower, unamended class, and that the Board examined the matter to bring the two into line (paras 1 to 4).
In exercise of the power under s.84 of the Black Money Act read with s.119 of the Income-tax Act, the Board amended the instruction of 15 March 2022 and directed that prosecution proceedings under s.49 or s.50 are not to be initiated in cases where penalty under s.42 or s.43 is not imposed or imposable in relation to assets covered by the proviso to those sections, that is an asset or assets other than immovable property whose aggregate value does not exceed a value equivalent to Rs 20 lakh at any time during the relevant previous year (para 5). The instruction further directs that it takes effect from the date on which the amendment to ss.42 and 43 made by the Finance (No. 2) Act 2024 became effective - 1 October 2024 (para 6).
The instruction works by reference rather than by fixing a separate prosecution threshold: the trigger is that penalty is not imposed or not imposable because of the proviso, so the officer has to reach the threshold question on the penalty side first and the prosecution decision follows it. Its own account of why it was needed is that the 2024 amendment widened the penalty proviso while the 2022 instruction, drafted against the older and narrower proviso, went on protecting only bank accounts up to Rs 5 lakh. The statutory position has since moved the same way but by a different route than the instruction: the Finance (No. 2) Act 2024, s.164, amended only ss.42 and 43, substituting the twenty lakh proviso in each with effect from 1 October 2024, and left ss.49 and 50 alone. The current text of ss.49 and 50 does carry a further proviso in the same terms - that the section shall not apply in respect of an asset or assets other than immovable property where the aggregate value does not exceed twenty lakh rupees - so Parliament has since put the threshold into the prosecution sections themselves; which Act did so, and from what date, is carried in a footnote that could not be read.
Prosecution proceedings under section 49 and/or 50 of BMA, 2015, would not be initiated in cases where penalty under section 42 and/or 43 of the BMA, 2015 is not imposed or imposable in relation to assets covered under the proviso to aforesaid sections i.e. an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed a value equivalent to Rs.20 lakh at any time during the relevant previous year.
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Handle my notice → Ask a CA on WhatsAppNot on the Board's own instruction. It directs that prosecution under s.49 or s.50 of the Black Money Act is not to be initiated in cases where penalty under s.42 or s.43 is not imposed or not imposable because the asset falls within the proviso to those sections - assets other than immovable property whose aggregate value does not exceed Rs 20 lakh. It amends an earlier instruction of 15 March 2022. This was decided by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Investigation Division; signed by Ravi Verma, Deputy Director of Income Tax. Issued in exercise of the power under s.84 of the Black Money Act 2015 read with s.119 of the Income-tax Act 1961) and bears on section BMA s.49, section BMA s.50, section BMA s.42, section BMA s.43, section BMA s.84, section 119 of the Income Tax Act 1961. It is reported as F. No. 285/46/2021-IT(Inv. V)/88 dated 18 August 2025, amending F. No. 285/46/2021/IT (Inv.V)/645 dated 15 March 2022. Prosecution under this Act carries rigorous imprisonment of not less than six months, and the officer who levies the penalty is often the same officer who recommends the complaint. This instruction is binding on the department and it ties the prosecution decision to the penalty threshold, so a client whose foreign assets are inside the proviso can be told in writing that the Board's own direction is against a complaint. Parliament has since put the same threshold into ss.49 and 50 themselves, with retrospective effect from 1 October 2024. If it applies to you, the first step is this: Value the foreign assets for the year, other than immovable property, and say in the reply whether the aggregate is inside or outside Rs 20 lakh.
By Instruction F. No. 285/46/2021/IT (Inv.V)/645 of 15 March 2022 the Board had directed that prosecution under s.49 or s.50 of the Black Money Act was not to be initiated where penalty under s.42 or s.43 was not imposed or imposable in relation to assets covered by the proviso to those sections as they then stood - that is, one or more bank accounts with an aggregate balance not exceeding a value equivalent to Rs 5 lakh at any time during the previous year. The instruction records its own purpose: to protect individuals holding foreign accounts with minor balances that might not have been reported through oversight or ignorance, by providing that non-disclosure of such accounts would attract neither penalty nor prosecution. The Finance (No. 2) Act 2024 then substituted the proviso to ss.42 and 43 with effect from 1 October 2024, so that neither section applies to an asset or assets other than immovable property whose aggregate value does not exceed twenty lakh rupees. The instruction records that this widened the class of assets outside the penalty sections while the 2022 instruction continued to give protection from prosecution only for the narrower, unamended class, and that the Board examined the matter to bring the two into line (paras 1 to 4). The matter was decided on 2025-08-18 by the CBDT Circulars & Instructions (Central Board of Direct Taxes, Investigation Division; signed by Ravi Verma, Deputy Director of Income Tax. Issued in exercise of the power under s.84 of the Black Money Act 2015 read with s.119 of the Income-tax Act 1961). On those facts the CBDT Circulars & Instructions held as follows. In exercise of the power under s.84 of the Black Money Act read with s.119 of the Income-tax Act, the Board amended the instruction of 15 March 2022 and directed that prosecution proceedings under s.49 or s.50 are not to be initiated in cases where penalty under s.42 or s.43 is not imposed or imposable in relation to assets covered by the proviso to those sections, that is an asset or assets other than immovable property whose aggregate value does not exceed a value equivalent to Rs 20 lakh at any time during the relevant previous year (para 5). The instruction further directs that it takes effect from the date on which the amendment to ss.42 and 43 made by the Finance (No. 2) Act 2024 became effective - 1 October 2024 (para 6).
The instruction works by reference rather than by fixing a separate prosecution threshold: the trigger is that penalty is not imposed or not imposable because of the proviso, so the officer has to reach the threshold question on the penalty side first and the prosecution decision follows it. Its own account of why it was needed is that the 2024 amendment widened the penalty proviso while the 2022 instruction, drafted against the older and narrower proviso, went on protecting only bank accounts up to Rs 5 lakh. The statutory position has since moved the same way but by a different route than the instruction: the Finance (No. 2) Act 2024, s.164, amended only ss.42 and 43, substituting the twenty lakh proviso in each with effect from 1 October 2024, and left ss.49 and 50 alone. The current text of ss.49 and 50 does carry a further proviso in the same terms - that the section shall not apply in respect of an asset or assets other than immovable property where the aggregate value does not exceed twenty lakh rupees - so Parliament has since put the threshold into the prosecution sections themselves; which Act did so, and from what date, is carried in a footnote that could not be read. In the words reproduced by the source cited on this page: "Prosecution proceedings under section 49 and/or 50 of BMA, 2015, would not be initiated in cases where penalty under section 42 and/or 43 of the BMA, 2015 is not imposed or imposable in relation to assets covered under the proviso to aforesaid sections i.e. an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed a value equivalent to Rs.20 lakh at any time during the relevant previous year."
It was decided by the CBDT Circulars & Instructions on 2025-08-18 and is reported as F. No. 285/46/2021-IT(Inv. V)/88 dated 18 August 2025, amending F. No. 285/46/2021/IT (Inv.V)/645 dated 15 March 2022. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section BMA s.49, section BMA s.50, section BMA s.42, section BMA s.43, section BMA s.84, section 119, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. In exercise of the power under s.84 of the Black Money Act read with s.119 of the Income-tax Act, the Board amended the instruction of 15 March 2022 and directed that prosecution proceedings under s.49 or s.50 are not to be initiated in cases where penalty under s.42 or s.43 is not imposed or imposable in relation to assets covered by the proviso to those sections, that is an asset or assets other than immovable property whose aggregate value does not exceed a value equivalent to Rs 20 lakh at any time during the relevant previous year (para 5). The instruction further directs that it takes effect from the date on which the amendment to ss.42 and 43 made by the Finance (No. 2) Act 2024 became effective - 1 October 2024 (para 6). It arises in Prosecution and Penalty matters, on section BMA s.49, section BMA s.50, section BMA s.42, section BMA s.43, section BMA s.84, section 119 of the Income Tax Act 1961, and was decided by Central Board of Direct Taxes, Investigation Division; signed by Ravi Verma, Deputy Director of Income Tax. Issued in exercise of the power under s.84 of the Black Money Act 2015 read with s.119 of the Income-tax Act 1961. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where it is inside, cite this instruction by its file number and date and ask in writing for a confirmation that no complaint is being recommended. Do not read it as covering immovable property, which the proviso excludes from the relief whatever it is worth. Keep it separate from the penalty argument - the instruction governs prosecution, and it does not by itself dispose of a s.43 penalty for a year outside the threshold.
Still good law. The instruction was read in full from the text carried in a subscription research database, which reproduces it under its file number and date and carries no 'as corrected by' annotation. Nothing withdrawing or modifying it was located. It is backdated by its own paragraph 6 to 1 October 2024, the date the amendment to ss.42 and 43 took effect. The statutory position now points the same way and is the stronger point to take: ss.49 and 50 of the Black Money Act as they currently stand each carry a further proviso in the same terms as the penalty proviso, excluding an asset or assets other than immovable property whose aggregate value does not exceed twenty lakh rupees. That proviso was not inserted by the Finance (No. 2) Act 2024, whose s.164 amended ss.42 and 43 only; the footnote identifying the amending Act and its commencement date could not be read on the section pages, so the earlier record that it was the Finance Act 2026 with retrospective effect from 1 October 2024 is not confirmed here and should be checked before it is relied on. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The instruction has now been read in full. It is short - six paragraphs - and it amends, rather than replaces, the instruction of 15 March 2022: paragraph 5 substitutes the whole of the operative direction, so the question of which paragraph of the earlier instruction was amended does not arise. Sections 42, 43, 49, 50 and 84 here are Black Money Act provisions, not Income-tax Act sections; s.119 of the Income-tax Act supplies the second limb of the power. An instruction of this kind binds the department; it is not a decision and it does not bind a court. Two points of drafting deserve attention. The direction in paragraph 5 applies the Rs 20 lakh threshold to an asset or assets whose aggregate value does not exceed that figure 'at any time during the relevant previous year', while the substituted proviso to ss.42 and 43, which the instruction itself reproduces in paragraph 2, carries no such words - the words 'at any time during the previous year' belonged to the old bank-account proviso and have been carried across into the new direction. And paragraph 6 backdates the instruction to 1 October 2024, so a prosecution launched between that date and 18 August 2025 in a case within the threshold is within its terms even though the instruction had not issued. The instruction does not say what is to happen to a complaint already filed before 18 August 2025 in a case now within the threshold; paragraph 6 backdates its operation to 1 October 2024 but says nothing about withdrawing a prosecution already launched. It does not address valuation - how the aggregate value of the asset or assets is to be arrived at, or on what date - which is the question the threshold turns on in practice. It says nothing about a case where penalty is not imposed for some reason other than the proviso, such as a finding of reasonable cause, and on its own words that case is outside the direction. And it does not deal with immovable property, which is excluded from the proviso in the penalty sections and in the prosecution sections alike. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
In exercise of the power under s.84 of the Black Money Act read with s.119 of the Income-tax Act, the Board amended the instruction of 15 March 2022 and directed that prosecution proceedings under s.49 or s.50 are not to be initiated in cases where penalty under s.42 or s.43 is not imposed or imposable in relation to assets covered by the proviso to those sections, that is an asset or assets other than immovable property whose aggregate value does not exceed a value equivalent to Rs 20 lakh at any time during the relevant previous year (para 5). The instruction further directs that it takes effect from the date on which the amendment to ss.42 and 43 made by the Finance (No. 2) Act 2024 became effective - 1 October 2024 (para 6).
TaxSphere, “CBDT instruction of 18 August 2025 on Black Money Act prosecutions”, https://taxnotice.vittsphere.com/caselaw/case/cbdt-instruction-18-august-2025-bma-prosecution-threshold/ (validity last checked 2026-08-23)
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The assessment under the Black Money Act has been quashed. Does the s.41 penalty go with it, and does the s.43 penalty go too?
Your return for the year was late and treated as invalid, though it did disclose the foreign assets in Schedule FA. Can the Rs 10 lakh penalty under s.42 still stand?
My client's Black Money assessment covers a foreign account opened in 2009 and not declared under the one-time compliance window. The department has charged tax and a penalty of three times the tax, and says the year is fixed by s.72(c). What do those provisions actually say?
Which provisions of the Income-tax Act apply to the Black Money Act, and can the officer borrow one that is not on the list?
