CBDT Instruction No. 01/2025 – Black Money Act Update

The Central Board of Direct Taxes (CBDT) has issued Instruction No. 01/2025, dated 18 August 2025, which amends its earlier guidance on prosecution under the Black Money Act. This update aims to help taxpayers with minor undisclosed foreign assets and simplify the management of accidental non-compliance.

Background

The Black Money Act, 2015 was created to address undisclosed foreign income and assets by imposing taxes, penalties, and criminal sanctions when necessary. Initially, in March 2022, the CBDT issued a directive (Instruction dated 15 March 2022) stating that if no penalty was imposed under Sections 42 or 43, then prosecution under Sections 49 or 50 should also not be initiated. This applied strictly to undisclosed foreign bank accounts of up to ₹5 lakh.

Legislative Amendment

Starting 1 October 2024, the Finance (No. 2) Act, 2024 expanded the threshold. Now, non-immovable foreign assets valued up to ₹20 lakh overall are exempt from penalties under Sections 42 and 43, which includes a broader range of asset categories beyond just bank accounts.

What the New CBDT Instruction Specifies

The latest instruction from the CBDT provides even more relief. It clearly states that prosecution under Sections 49 and 50 will not begin in cases where no penalty is applied or where it is not applicable under the amended Sections 42 and 43, related to foreign assets (excluding immovable property) valued up to ₹20 lakh.

What This Means for Taxpayers

• Undisclosed foreign assets (excluding property) up to ₹20 lakh: No penalty under Sections 42/43 and no prosecution under Sections 49/50
• Undisclosed foreign assets over ₹20 lakh: Standard penalties and prosecution processes apply
• Undisclosed immovable property (any value): Penalties and possible prosecution still apply

Significance of the Change

• Relief for Genuine Taxpayers: People who may have accidentally left out low-value overseas assets no longer face harsh penalties.
• Consistency with Legal Amendments: The CBDT’s instruction updates existing policy to match the new exemptions introduced by the 2024 Finance Act.
• Focus on Serious Non-Compliance: This clear threshold limits enforcement for minor mistakes and reserves legal action for major violations.

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