The Central Board of Direct Taxes (CBDT) has issued a significant amendment to its earlier instruction dated March 15, 2022, concerning prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA, 2015).
Previously, the Board had clarified that prosecution under sections 49 and 50 of BMA, 2015, would not be initiated where penalties under sections 42 and 43 were not imposed or imposable in cases of small-value undisclosed foreign bank accounts with balances not exceeding Rs 5 lakh. This relief was aimed at protecting individuals who may have inadvertently failed to disclose minor balances in overseas accounts.

However, with the Finance (No. 2) Act, 2024, effective from October 1, 2024, the threshold for exemption under sections 42 and 43 has been revised. The new proviso states that penalty provisions will not apply to assets (other than immovable property) where the aggregate value does not exceed Rs 20 lakh at any time during the relevant financial year.
In line with this legislative change, CBDT has now amended its 2022 Instruction. It has directed that prosecution under sections 49 and 50 of BMA, 2015, will not be initiated in cases where penalties under sections 42 and 43 are not attracted in respect of assets (excluding immovable property) valued up to Rs 20 lakh.
This amendment aligns prosecution relief with the revised penalty exemption, ensuring consistency in enforcement. The revised Instruction takes effect from the date the Finance (No. 2) Act, 2024, brought the amended provisions of sections 42 and 43 into force.
Tax experts believe this move will provide substantial relief to individuals and entities with low-value foreign holdings, reducing the risk of harsh penal consequences for minor non-disclosures. It also signals the government's intent to focus enforcement on significant cases of black money, rather than small or inadvertent omissions.
Official copy of the instruction is as follows
The Central Board of Direct taxes ('Board") had issued an Instruction, vide F.No.285/46/2021/IT (Inv.V)/645 dated 15.03.2022, clarifying that prosecution under section 49 and/or 50 of BMA, 2015 shall 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, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to Rs.5 lakh at any time during the previous year. The instruction aimed to protect individuals holding foreign accounts with minor balances that might not have been reported due to oversight or ignorance, by providing that non-disclosure of such accounts will not attract penalty or prosecution.
The Finance (No.2) Act. 2024 has substituted the proviso to section 42 and 43 of the BMA, 2015 w.e.f 01.10.2024 and current proviso to section 42 and section 43 reads as under:
"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 amendment has expanded the scope of assets, which are not amenable to penalty provisions under section 42 and/or 43 of the BMA, 2015, while the existing Instruction continues to provides protection from prosecution proceedings only in respect of assets, which are covered by the unamended provisions.
The matter has been examined in Central Board of Direct Taxes ('Board") and in order to provide relief from institution of prosecution proceedings under section 49 and/or 50 of BMA, 2015, in respect of asset(s) covered under the proviso to penalty provisions under section 42 and 43 of BMA, 2015, it has been decided to amend the Instruction dated 15.03.2022.
5 In view of the above and in exercise of powers under section 84 of the BMA, 2015 read with section 119 of the Income Tax Act, 1961, the Board hereby amends Instruction dated 15.03.2022 and directs that 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.
This shall come into effect from the date when the amendment to section 42 and 43 of BMA, 2015 became effective through Finance (No.2) Act, 2024.
Official copy of the instruction has been attached