Black Money Act, 2015: formula sheet

Key formulas

Short title, extent and commencement

Extends to the whole of India; in force from 1 July 2015

The date 1 July 2015 was substituted for 1 April 2016 by the Removal of Difficulties Order, 2015.

Assessee (Section 2(2))

Resident in the previous year; OR non-resident/not ordinarily resident who was resident in the previous year of the income, or in the previous year the asset was acquired

Residence is judged under section 6 of the Income-tax Act, 1961, as the Act's text states.

Total undisclosed foreign income and asset (Section 4(1))

(a) undisclosed foreign-source income + (b) foreign-source income where no return was filed in time + (c) value of undisclosed foreign asset

Applies to any previous year of an assessee.

Undisclosed asset located outside India (Section 2(11))

Foreign asset held in own name or as beneficial owner + no explanation of source, or explanation unsatisfactory to the AO

Includes financial interest in any entity.

Exclusion and no double taxation (Section 4(2) and 4(3))

Variations under sections 29-43C, 57-59, 92C of the Income-tax Act are excluded; included income is not part of total income under the Income-tax Act

Prevents the same income being taxed twice.

Computation rules (Section 5(1)(i))

No deduction for expenditure or allowance and no set-off of loss

This applies whether or not the Income-tax Act would allow it.

Previous year (Section 2(9)(d))

12 months from 1 April of the relevant year in any other case, immediately preceding the assessment year

Special rules apply for new businesses, new sources and discontinuance.

Charge of tax (Section 3(1))

Tax = 30% × total undisclosed foreign income and asset

Applies for assessment years commencing on or after 1 April 2016. Tax only; penalty and interest are separate.

Total undisclosed foreign income and asset (Section 4(1))

(a) undisclosed foreign income in return + (b) foreign income where no return filed + (c) value of undisclosed foreign asset

Income is from a source located outside India. The asset must be located outside India.

Year of charge for an asset (proviso to Section 3(1))

Taxed on its value in the previous year in which it comes to the notice of the Assessing Officer

Value means fair market value, determined in the prescribed manner.

Computation rule (Section 5(1)(i))

No deduction for expenditure or allowance and no set-off of loss

Applies whether or not the item would be allowed under the Income-tax Act.

Reduction for taxed income: assets in general (Section 5(1)(ii))

Chargeable value = Value of asset − income already assessed or assessable that the asset was acquired from

Income assessed under the Income-tax Act before the year to which this Act applies, or assessable or assessed under this Act, is reduced from the value. The assessee must furnish evidence to the Assessing Officer's satisfaction. No proportion is used for assets other than immovable property.

Reduction for taxed income: immovable property (Section 5(2))

Reduction = Value of asset on the first day of the financial year of notice × (assessed or assessable foreign income ÷ total cost of asset); Chargeable value = Value − Reduction

The proportion applies only to immovable property. Evidence must satisfy the Assessing Officer.

Rounding (Section 79)

Income and asset: nearest ₹100. Amount payable or receivable: nearest ₹10

Method is as prescribed.

No double taxation (Section 4(3))

Income taxed under this Act is not part of total income under the Income-tax Act

Also, Section 4(2) excludes certain assessment variations (transfer pricing and computation provisions) from undisclosed foreign income.

Appeal to Commissioner (Appeals), section 15

Time limit = 30 days from service of notice of demand (assessment or penalty) or from service of intimation of the order in other cases

Delay can be condoned if there is sufficient cause and the delay does not exceed one year (section 15(4)).

Grounds for first appeal, section 15(1)

Tax amount objected | liability to be assessed denied | penalty objected | rectification order enhancing assessment or reducing refund | refusal of rectification claim under section 12

Five situations. Any person in these situations may appeal.

Powers of Commissioner (Appeals), section 17

Assessment: confirm, reduce, enhance or annul. Penalty: confirm, cancel or vary (enhance or reduce). Other cases: determine issues and pass orders

Enhancement needs an opportunity of being heard (sections 15(5) and 17(3)).

Appeal to Appellate Tribunal, section 18

Time limit = 60 days from communication of the order; cross-objections within 30 days of receiving notice of appeal

Either the assessee or the department (via Principal Commissioner or Commissioner directing the AO) may appeal. Delay can be condoned for sufficient cause up to one year.

Appeal to High Court, section 19

Time limit = 120 days from receipt of the Tribunal order; only if a substantial question of law is involved

The High Court formulates the question and hears the appeal on it. It may admit a late appeal for sufficient cause, with no outer limit stated in section 19(3).

Direct assessment or recovery not barred, section 14

Person on whose behalf or for whose benefit the income/asset is held can be assessed directly and tax recovered from them

Applies to undisclosed foreign income receivable and undisclosed foreign assets held.

Penalty for non-filing of return (s. 42)

₹10,00,000 where return not filed before end of the assessment year

Applies to resident other than not ordinarily resident, required to file under section 139(1), with foreign asset, beneficiary interest or foreign income. Assessing Officer may direct it.

Penalty for non-disclosure or inaccurate particulars (s. 43)

₹10,00,000 where a filed return omits or misstates foreign asset or foreign income

Applies to returns filed under section 139(1), (4) or (5). Not wilfulness-based.

₹20 lakh proviso

No application if aggregate value of asset(s) other than immovable property ≤ ₹20,00,000

Applies to sections 42, 43, 49 and 50. Immovable property is outside the relief. Exchange rate: SBI telegraphic transfer buying rate.

Failure to file return, wilful (s. 49)

Rigorous imprisonment 6 months to 7 years + fine

No prosecution if return is furnished before the assessment year expires.

Wilful non-disclosure in return (s. 50)

Rigorous imprisonment 6 months to 7 years + fine

Applies to a return filed under section 139(1), (4) or (5).

Wilful tax evasion (s. 51)

s. 51(1) resident: 3 to 10 years + fine; s. 51(2) any person: 3 months to 3 years, fine at court's discretion

Section 51(3) lists deemed wilful attempts: false entries, omitting entries, possessing false books, any circumstance enabling evasion.

False verification (s. 52) and abetment (s. 53)

Rigorous imprisonment 6 months to 7 years + fine

Section 52 needs knowledge or belief that the statement is false. Section 53 covers inducing a false account or an offence under section 51(1).

Repeat offence (s. 58)

Imprisonment 3 to 10 years + fine ₹5 lakh to ₹1 crore

For a second or later conviction under sections 49 to 53.

Who must comply

Resident other than not ordinarily resident (RNOR excluded)

Sections 42, 43, 49 and 50 apply only to a resident other than not ordinarily resident. A non-resident or a not ordinarily resident person is outside these sections.

Civil penalty for non-filing (section 42)

Penalty = ₹10,00,000, if no return is furnished before the end of the relevant assessment year

Applies to a person required to file a return who held a foreign asset, was a beneficiary, or had foreign income. The Assessing Officer may direct it.

Civil penalty for non-disclosure or inaccurate particulars (section 43)

Penalty = ₹10,00,000

Applies where a return was filed but foreign assets or income were not reported, or inaccurate particulars were given.

Prosecution for non-filing (section 49)

Rigorous imprisonment: minimum 6 months, maximum 7 years, plus fine

Needs wilful failure to file the return in due time. No proceedings if the return is furnished before the expiry of the assessment year.

Prosecution for non-disclosure in return (section 50)

Rigorous imprisonment: minimum 6 months, maximum 7 years, plus fine

Needs wilful failure to give information about a foreign asset or foreign income in a return already filed.

Relief threshold

No penalty or prosecution if assets (other than immovable property) have aggregate value ≤ ₹20,00,000

Immovable property is not covered by the relief. The test is on aggregate value, so a single asset above ₹20 lakh, or several together above it, loses the relief.

Foreign currency conversion

Rupee value = foreign balance × SBI telegraphic transfer buying rate on the date of valuation

Used to test the ₹20 lakh threshold for foreign currency accounts.

Section 87 and section 88

s.87: Central Boards of Revenue Act, 1963, s.2(c)(1), new item (x). s.88: PMLA, 2002 Schedule, Part C, new entry (4)

Entry (4) covers wilful attempt to evade tax, penalty or interest referred to in section 51 of the Black Money Act.

Quick revision

• The Act extends to the whole of India and came into force on 1 July 2015.
• Tax is charged at 30% on total undisclosed foreign income and asset, for assessment years commencing on or after 1 April 2016.
• An undisclosed asset is charged on its value in the previous year in which it comes to the notice of the Assessing Officer.
• Value means fair market value, determined in the prescribed manner, including financial interest in any entity.
• Assessee: a resident, or a non-resident or not ordinarily resident who was resident in the relevant previous year or the acquisition year.
• Undisclosed asset: held in his name or as beneficial owner, with no explanation of source or an unsatisfactory one.
• No deduction for expenditure or allowance and no set-off of loss is allowed, whether or not the income-tax law would allow it.
• Income already assessed to tax is reduced from the asset value, but only if you give evidence to the Assessing Officer's satisfaction.
• Income taxed under this Act does not form part of total income under the income-tax law.
• Direct assessment of the person for whose benefit the income or asset is held is not barred.
• Declared assets are taxed at 30% of value on the date of commencement. They stay out of total income only if tax and penalty are paid by the notified date.
• Wilful attempt to evade tax, penalty or interest under the Act is a scheduled offence under the Prevention of Money-laundering Act, 2002.

Common mistakes

• Treating every non-resident as outside the Act. Fix: Remember the extended limb of section 2(2)(b): a non-resident or not ordinarily resident person is an assessee if he was resident in the year of the income or the year the asset was acquired.
• Including all foreign assets as undisclosed. Fix: An asset is undisclosed only if there is no explanation of the source of investment, or the AO finds it unsatisfactory.
• Taxing the asset in the year it was acquired. Fix: Use the proviso to Section 3(1): the asset is charged on its value in the year it comes to the Assessing Officer's notice.
• Using the cost of the asset as the base instead of its current value. Fix: The charge is on fair market value. Cost appears only as the denominator in the proportion for immovable property.
• Saying the Tribunal appeal must be filed within 30 days. Fix: Remember 30 for Commissioner (Appeals), 60 for Tribunal, 120 for High Court.
• Saying the High Court hears any appeal on facts. Fix: Section 19 needs a substantial question of law, which the High Court formulates.
• Treating the ₹20 lakh limit as applying to all assets including immovable property. Fix: Remember the proviso excludes immovable property. A foreign house gets no relief however small its value.
• Saying the ₹10 lakh penalty is mandatory. Fix: Write that the Assessing Officer "may direct" the penalty. It is discretionary in wording.
• Applying the ₹20 lakh relief to a foreign flat or land. Fix: Always split the assets into immovable property and others. Test only the others against ₹20 lakh.
• Quoting the old ₹5 lakh bank balance limit. Fix: Use the current proviso: aggregate value of assets other than immovable property not above ₹20 lakh, not just bank accounts.

Exam tips

• Learn the exact two limbs of the assessee definition. MCQs often test the non-resident limb.
• Always say that residence is tested under section 6 of the Income-tax Act, 1961 as the Act states, and do not substitute Income-tax Act, 2025 rules in the definition answer.
• In a case scenario, check the explanation of source before calling an asset undisclosed.
• Remember the section 5 computation bar: no deduction and no loss set-off.
• Quote the commencement date as 1 July 2015 and extent as the whole of India.
• For numerical questions, write the year-of-notice point in the first line. Examiners look for it.
• Quote the 30% rate and "no deduction, no set-off" with Section 3 and Section 5.
• For immovable property, show the reduction as a proportion, as in the Act's illustration. For other assets, reduce by the taxed income itself. Show each step so you earn method marks.