The Finance Bill, 2026 proposes a significant relaxation of prosecution provisions under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to provide relief in cases of minor and inadvertent non-disclosures. Sections 49 and 50 of the Act currently mandate rigorous prosecution, including imprisonment and fine, for wilful failure by residents to disclose foreign income or assets. The proposed amendment inserts a proviso to exclude prosecution where undisclosed foreign assets, other than immovable property, have an aggregate value not exceeding ₹20 lakh. This change aligns the prosecution framework with the existing penalty thresholds under sections 42 and 43 of the Act, ensuring proportionality and consistency. Importantly, the amendment is proposed to operate retrospectively from 1 October 2024, offering relief in pending and past cases involving small-value foreign assets. The reform reflects a calibrated shift from punitive enforcement to a more balanced approach, focusing prosecution on serious violations while reducing litigation and hardship for taxpayers involved in low-value, non-material non-disclosures.
Relaxation of conditions for prosecution under the Black Money Act
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 [the Black Money Act] provides for penal and prosecution measures in cases of wilful non-disclosure of foreign income and assets by residents. Sections 49 and 50 of the Black Money Act, prescribe prosecution, including rigorous imprisonment and fine, where a resident wilfully fails to furnish a return of income or wilfully omits to disclose foreign assets or income in the return of income.
In order to provide relief in cases of minor and inadvertent non-disclosures and to align the prosecution provisions with the penalty framework under the Black Money Act, it is proposed to amend sections 49 and 50 to provide that these provisions shall not apply in respect of foreign assets, other than immovable property, where the aggregate value does not exceed twenty lakh rupees.
These amendments shall take effect retrospectively from the 1st day of October, 2024.
[Clause 144]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 144 of the Bill seeks to amend sections 49 and 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 relating to the punishment for failure to furnish return in relation to foreign income and asset and punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India, respectively.
The said section provides for prosecution where a resident, other than not ordinarily resident in India, holding foreign assets or income wilfully fails to furnish the return of income or fails to disclose such information in their return of income.
It is proposed to amend the said sections to insert proviso in both the sections so as to provide that the provisions of the said sections 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, to make it harmonious with the threshold specified in sections 42 and 43 of the said Act.
These amendments will take effect retrospectively from 1st October, 2024.
| MEMORANDUM REGARDING DELEGATED LEGISLATION | ||
| The provisions of the Bill, inter alia, empower the Central Government to issue notifications and the Board to make rules for various purposes as specified therein. | ||
| Clause 15 of the Bill seeks to amend section 270AA of the Income-tax Act, 1961 relating to immunity from imposition of penalty, etc. Subsection (2) of the said section empowers the Board to provide by rules the form for application to grant immunity and the manner of verification of such application. | ||
| Clause 69 of the Bill seeks to amend section 352 of the Income-tax Act, 2025 relating to tax on accreted income. It is proposed to substitute serial number 8 and the entries relating thereto of the Table in sub-section (4) of the said section so as to empower the Board to provide by rules for the conditions for merger for the purposes of the said section. | ||
| Clause 70 of the Bill seeks to insert a new section 354A in the Income-tax Act, 2025 relating to merger of registered non-profit organisations in certain cases. The said section empowers the Board to provide by rules for the conditions of merger for the purposes of said the section. | ||
| Clause 74 of the Bill seeks to amend section 395 of the Income-tax Act, 2025 relating to certificates. Sub-section (6) of the said section empowers the Board to provide by rules for the conditions for filing application to the prescribed income-tax authority. | ||
| Clause 85 of the Bill seeks to amend section 440 of the Income-tax Act, 2025 relating to immunity from imposition of penalty, etc. Subsection (2) of the said section empowers the Board to provide by rules the form and the manner of verification of application for grant of waiver of penalty and immunity from initiation of proceeding for prosecution. | ||
| Clause 109 of the Bill seeks to amend Schedule IV of the Income-tax Act, 2025 relating to income not to be included in total income of eligible non-residents, foreign companies and other such persons. It is proposed to amend the said Schedule so as to empower the Board to provide by rules for the conditions to be fulfilled by person rendering any service in India in connection with any scheme. | ||
| Clause 110 of the Bill seeks to amend Schedule VI of the Income-tax Act, 2025 relating to income not to be included in the total income of certain eligible persons in International Financial Services Centre or having income therefrom. Sub-item (II) of item C of the said Schedule empowers the Board to provide by rules for the conditions for holding of number of units. | ||
| Clauses 114 to 128 of the Bill seeks to insert a new Chapter relating to the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026. Clause 128 empowers the Board to make rules for carrying out the provisions of the said Scheme. | ||
| Indirect taxes | ||
| Clause 133 of the Bill seeks to insert a new section 56A in the Customs Act. Sub-section (1) of the said section 56A empowers the Central Government to make rules to provide for the manner and the conditions subject to which the fish harvested by an Indian-flagged fishing vessel beyond territorial waters of India may be brought into India free of duty and the fish that has landed at a foreign port may be treated
as export of goods. Sub-section (2) of the said section empowers the |
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| Clause 135 of the Bill seeks to amend clause (b) of section 84 of the Customs Act, so as to empower the Board to make regulations for the custody of goods imported or to be exported by post or courier. | ||
| 2. The matters in respect of which rules or regulations may be made are matters of procedure and details and it is not practicable to provide for them in the Bill itself.
1. The delegation of legislative powers is, therefore, of a normal character. |
Extract of Relevant Amendment Proposed by Finance Bill, 2026
144. Amendment of Act 22 of 2015.
In the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015,––
(a) in section 49, after the proviso, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 2024, namely:––
“Provided further 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.”;
(b) in section 50, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 2024, namely:––
“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.”.
| Declaration under the Provisional Collection of Taxes Act, 2023 | ||
| It is hereby declared that it is expedient in the public interest that the provisions of sub-clause (a) of clause 136 of this Bill shall have immediate effect under the Provisional Collection of Taxes Act, 2023. | 50 of 2023. |
