I want to quote the Black Money Act penalty section and its proviso in a reply. What is the exact wording, from when did the higher threshold apply, and who does the section reach?
Section 43 of the Black Money Act says the Assessing Officer 'may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees'. Its proviso was substituted by the Finance (No. 2) Act 2024 with effect from 1 October 2024 and now excludes assets other than immovable property whose aggregate value does not exceed twenty lakh rupees; before that it excluded only bank accounts with an aggregate balance up to five hundred thousand rupees. The section bites only a person who is a resident other than not ordinarily resident, and no source found decides whether the widened proviso reaches a default committed before 1 October 2024.
The section is short and it is worth quoting in full, because most notices paraphrase it and the paraphrase usually drops the word that matters. On the department's own page for the section it reads:
"If any person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, who has furnished the return of income for any previous year under sub-section (1) or sub-section (4) or sub-section (5) of section 139 of the said Act, fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India, held by him as a beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, at any time during such previous year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees".
Four things in that sentence do work. The person has to be a resident other than not ordinarily resident, and the test is the s.6(6) test of the Income-tax Act, not a test of this Act. The return has to be one furnished under s.139(1), (4) or (5) - a return under s.139 as such, which is why the section is a reporting penalty and not an income penalty. The asset is caught whether it is held as beneficial owner 'or otherwise', which is the department's answer to an ownership defence. And the officer 'may direct' - the word that the Special Bench in Vinil Venugopal held cannot be read as 'shall'.
The proviso carries a footnote on the same page: "Substituted by the Finance (No. 2) Act, 2024, w.e.f. 1-10-2024." As it now stands it reads: "Provided that this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees". The footnote sets out what it replaced: "Provided that this section shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year." Two differences matter on a file. The old proviso reached only bank accounts, so a brokerage or custodial account holding securities was outside it whatever its balance; the new one reaches every asset except immovable property. And the old one was tested at any time during the year, the new one on aggregate value with no time stated.
Section 42 is the twin provision and it penalises the failure to furnish the return at all rather than the failure to report in a return that was filed. It carries the same Rs 10 lakh figure and the same substituted proviso from the same date. Section 43 borrows its currency conversion rule from s.42, whose Explanation reads: "For determining the value equivalent in rupees of the balance in an account maintained in foreign currency, the rate of exchange for calculation of the value in rupees shall be the telegraphic transfer buying rate of such currency as on the date for which the value is to be determined as adopted by the State Bank of India constituted under the State Bank of India Act, 1955." That Explanation is written for the balance in an account. It says nothing about how to value securities, and this library sets out the consequences of that separately.
Whether the widened proviso helps a year that closed before 1 October 2024 is not decided by anything found. The amending Act says 'w.e.f.' and not 'with retrospective effect', and the Supreme Court's Constitution Bench decision already in this library holds that legislation is presumed not to operate retrospectively, with the qualification that a clarificatory or beneficial amendment may be read back. The contrary line, which practitioners' commentary sets against it, is that an officer who validly began penalty proceedings under the unamended section keeps the power to complete them notwithstanding a later increase in the threshold. There is one further piece of statutory material that has appeared since. The Finance Act 2026 inserted the same Rs 20 lakh proviso into ss.49 and 50, the prosecution provisions, and the department's own page for s.50 footnotes that insertion as "Inserted by the Finance Act, 2026, w.r.e.f. 1-10-2024". Parliament therefore used retrospective language when it wanted to, in the same Act and on the same threshold, and did not do so for ss.42 and 43. That cuts both ways in argument and it should be put to the client as an argument, not as an answer.
On residential status, the section's own words do the work: it applies to a person who is a resident other than not ordinarily resident. The return form matches. The instructions to Form ITR-2 for assessment year 2020-21 state, of Schedule FA: "If you are a resident in India, you are required to furnish details of any foreign asset etc. in this Schedule. This Schedule need not be filled up if you are 'not ordinarily resident' or a 'non-resident'." The Income-tax Department's own note on foreign asset reporting says the same thing, that Schedule FA need not be completed by a person who is not ordinarily resident or a non-resident, and it also records that the details are of assets held at any time during the relevant calendar year ending on 31 December - not the Indian previous year. That calendar-year point is the one that most often turns an apparent omission into a reporting-period mismatch.
The Income-tax Act 2025 does not carry this penalty. It is a provision of a separate statute and it survives the new Act unchanged; nothing found suggests the Black Money Act sections have been renumbered.
A reply that quotes the section correctly is worth more than one that argues around it. The word 'may' is the whole discretion argument and it is in the section; the proviso is the threshold argument and its commencement date decides which years it can even be pleaded for; and the opening words are the residential-status argument, which can remove a year without any argument on discretion at all. Getting the old proviso wrong is the expensive mistake - claiming Rs 20 lakh relief for a year before 1 October 2024, or claiming the old Rs 5 lakh relief for a brokerage account which it never reached, invites a one-line answer and costs the credibility the rest of the reply needs.
The department says the Black Money Act applies to my foreign account from July 2015. Is that retrospective?
I left my foreign ESOPs out of Schedule FA. Is the Rs 10 lakh penalty automatic?
The foreign investment was in my balance sheet and elsewhere in the return, just not in Schedule FA. Does that still cost Rs 10 lakh?
I moved to Singapore with my family. Can the AO's tie-breaker questionnaire alone make me an Indian resident?
My name is on a foreign account only as a second holder and my son owns it. Is the Rs 10 lakh penalty still mine?
Is the Rs 10 lakh penalty under s.43 of the Black Money Act automatic once the officer finds a foreign asset missing from Schedule FA?
I have come back to India after seven years working abroad and my NRNR rupee deposits and foreign currency deposits are still running. Do the non-resident concessions stop the day I become resident, and when is the interest taxed?
The foreign asset is small and no penalty is proposed. Can they still prosecute me for leaving it out of Schedule FA?
Every page in this library links to what it was written from, so you can check it rather than take our word for it.