Black Money has usually been a factor of difficulty for India, and the authorities have been trying to deal with it for ages. Recognizing the restrictions beneath the prevailing legislation, the authorities enacted a completely new law on black cash to deal with money stashed away abroad. The Bill changed into enacted in May 2015 because of the ‘Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015’ (Black Money Act).

Under the Black Money Act, reporting of world property within the tax return has been given utmost significance for individuals qualifying as “Resident and Ordinarily Resident” (ROR) in India. Exemption from reporting of foreign assets is available for overseas nationals with difficulty fulfilling targeted conditions. Disclosure of world property and earnings held/earned outdoor at any factor in the 12 months is mandatory.

It is likewise important to reveal assets that may be offered/ disposed of at some point in the applicable year. Even if a ROR man or woman does not have any taxable earnings in India, a tax submitting requirement arises if the man or woman owns any outdoor property in India. This particularly applies to foreign nationals who accompany their spouses coming to work in India. After a time frame, they qualify as ‘ROR’ while not having any supply of profits in India.


Under the Income-tax Act, 1961 (IT Act), reporting necessities for foreign belongings had been initially delivered inside the Indian tax go back from FY 2011-12. Initial non-disclosure might also have attracted a general penalty under the IT Act; however, after the advent of the Black Money Act, penal results on non-disclosure have been made more stringent.
The key implications beneath the Black Money Act have been indexed below:

Undisclosed foreign profits and assets may be taxed at a flat price of 30 percent. Exemptions or deductions which may otherwise be applicable in such instances shall no longer be allowed. Concealment of profits and assets and tax evasion in terms of foreign belongings will be answerable for prosecution with punishment of rigorous imprisonment of up to 10 years. Penalty for concealment of income and assets to be levied at 300 percent of the tax sought to be evaded.

Beneficial proprietor or beneficiary of overseas assets will be mandatorily required to document return, even supposing there may be no taxable profits. The penalty of Rs 10 lakhs may be levied on non-submitting of tax returns or submitting of tax go back with insufficient disclosure of foreign assets. Wilful failure to provide a tax return or disclose statistics relating to foreign earnings and property in going back of income can also result in prosecution with punishment of rigorous imprisonment of up to seven years.

The felony angle

With the results applicable beneath the Black Money Act, it can be cited that the IT Act additionally provides that the tax office has the energy to open assessment/ re-evaluation as much as 16 previous economic years in case of unaccounted overseas property/profits for ROR taxpayers. Since the Black Money Act has been enacted just a few years again, there are restrained judicial pronouncements regarding the identical provisions, that too, with divergent views.

The Calcutta High Court has lately upheld initiation of prosecution lawsuits under the Black Money Act for failure to file inherited overseas bank bills in the Indian Income-tax go back for a duration before enacting the Black Money Act. It turned into further view that motion may be undertaken underneath the IT Act and the Black Money Act since the penalty levied underneath the IT Act was for concealing income/ imparting incorrect particulars of earnings. However, the Black Money Act lawsuits relate to failure in reporting overseas assets within the ITR. Hence, it cannot be stated that the taxpayer is being penalized for the identical offense two times.

In a distinct case of High court, Separately, Delhi, in a disthe earnings-tax department from taking motion in opposition to a taxpayer, until the date of the following hearing. While providing the relaxation, the High Court was of the view that the Central Government became now not within its strength to difficulty notifications under an Act which turned into no longer enacted on the time of difficulty of the notification itself.

However, on attraction from the Central Government, the Hon’ble Supreme Court has stayed the order of the High Court and allowed the tax branch to hold its proceedings in opposition to the taxpayer. Hence, given the stringent penal effects for now not reporting or wrong reporting, it’s miles recommended to properly document all foreign income and belongings inside the India tax return, to obviate the trials of penal implications underneath the Black Money Act.