Finance Minister Nirmala Sitharaman’s Budget 2024 brings good news for Indian employees working with multinational companies and sent abroad for assignments.

These employees often receive ESOPs from their companies and need to open bank accounts and enroll in social security schemes abroad. Now, if the value of these foreign assets is up to Rs 20 lakh, non-reporting will not result in any penalty.

Previously, failing to accurately disclose or report such foreign assets in income tax returns could lead to a penalty of up to Rs 10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

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Budget 2024 proposes to eliminate the Rs 10 lakh penalty under sections 42 and 43 of the Black Money Act for not reporting foreign assets (excluding immovable property) with a total value not exceeding Rs 20 lakh. This change will be effective from October 1, 2024.

This exemption also applies to incorrect or non-reporting of these foreign assets.

Penalties Under the Black Money Act

According to the Budget 2024 Memorandum, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, outlines specific penalties for not reporting foreign income and assets.

Section 42 of the Black Money Act imposes a penalty on residents (excluding those not ordinarily resident) who fail to include details of foreign income and assets in their income tax return. This applies if the individual owns or benefits from assets located outside India or has income from foreign sources.

Section 43 of the Act mandates a penalty for failing to provide accurate information about foreign assets or income in the tax return. This section also applies to residents (excluding those not ordinarily resident) who fail to report foreign assets or income correctly.

Also Read: Budget 2024: Customs Duty Reduced on Gold, Silver and Platinum

Reporting Requirements Under the Black Money Act

Residents and ordinarily resident individuals must disclose all foreign assets (including investments in shares and securities) and income from such assets when filing their Income Tax Return (ITR). Failing to report these foreign assets or income can result in a penalty of Rs 10 lakh under sections 42 or 43 of the Black Money Act, regardless of the asset’s value.

However, there is an exception: the provisions of these sections do not apply to bank accounts with a total balance not exceeding Rs 500,000 at any time during the previous year.

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