Direct Tax Laws and International Taxation · Black Money Act, 2015

Black Money Act 2015: Scope and Key Definitions

Updated 11 October 2026 · Fact-checked

The Black Money Act, 2015 taxes undisclosed foreign income and assets separately from normal income. It extends to the whole of India and came into force on 1 July 2015. To solve questions, first test whether the person is an assessee, then whether the item is undisclosed foreign income or an undisclosed foreign asset.

Understand Black Money Act 2015: Scope and Key Definitions

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is a separate law. It deals only with income from sources outside India and assets located outside India that the taxpayer has not disclosed. Ordinary income is still taxed under the income-tax law.

Extent and commencement. The Act extends to the whole of India. Section 1 says that, save as otherwise provided, it came into force on 1 July 2015. That date was substituted for 1 April 2016 by a Removal of Difficulties Order, with effect from 1 July 2015.

Who is an assessee. An assessee is a person who is resident in India in the previous year. A non-resident or not ordinarily resident person is also an assessee, but only if he was resident in India in the previous year to which the foreign income relates, or in the previous year in which the foreign asset was acquired. The definition refers to residence under section 6 of the Income-tax Act, 1961, as the Black Money Act text itself says. Do not mix this with the residence rules of the Income-tax Act, 2025.

What is taxed. Section 4 builds the total undisclosed foreign income and asset from three items: (a) foreign-source income not disclosed in the return filed in time; (b) foreign-source income where a return was required but none was filed in time; and (c) the value of an undisclosed asset located outside India. An undisclosed asset located outside India is an asset, including a financial interest in any entity, held by the assessee in his name or as beneficial owner, where he has no explanation of the source of investment or the Assessing Officer finds the explanation unsatisfactory.

Two protections. Variations made in foreign income in a regular assessment under sections 29 to 43C, 57 to 59 or 92C of the Income-tax Act are not included in undisclosed foreign income. Also, income included under this Act does not form part of total income under the income-tax law, so it is not taxed twice.

Key rules to remember

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.

How to solve Black Money Act 2015: Scope and Key Definitions questions

Use this order for any scope or definition question. It keeps the answer short and tied to the Act.

1Identify the person and the previous year in question.
2Test whether he is an assessee: resident in the previous year, or non-resident or not ordinarily resident who was resident in the relevant earlier year.
3Classify the item: foreign-source income or foreign asset. Items inside India are outside this Act.
4For income, check whether it was disclosed in a return filed in time, or whether a return was required but not filed in time.
5For an asset, check whether it is held in his name or as beneficial owner and whether the source is explained to the AO's satisfaction.
6Apply the exclusions: regular-assessment variations under the listed Income-tax Act sections are not included.
7Conclude with the section reference and state that the included amount is outside total income under the income-tax law.

Quickest way: Three-question screen

When to use it: Use this for MCQs and short case scenarios where time is tight.

Is the person an assessee? Resident, or a non-resident who was resident in the relevant year.
Is the income or asset outside India?
Is it undisclosed: not in a timely return, no return filed, or no satisfactory source explanation?
If all three are yes, it falls under section 4. If any one is no, it does not.

Common mistakes in Black Money Act 2015: Scope and Key Definitions

Treating every non-resident as outside the Act.
Students remember that foreign income of non-residents is usually not taxed in India.
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.
The word asset is read without the explanation condition.
Fix: An asset is undisclosed only if there is no explanation of the source of investment, or the AO finds it unsatisfactory.
Taxing the same income under both Acts.
Students forget section 4(3).
Fix: Income included under the Black Money Act does not form part of total income under the Income-tax Act.
Allowing expenses or loss set-off while computing undisclosed income.
Habit from normal computation of total income.
Fix: Section 5(1)(i) bars any deduction of expenditure or allowance and any set-off of loss.
Quoting 1 April 2016 as the commencement date.
That was the original date in the Act.
Fix: Write 1 July 2015, which was substituted by the Removal of Difficulties Order, 2015.
Including variations from a regular assessment in undisclosed foreign income.
The variation concerns a foreign-source income, so it looks covered.
Fix: Section 4(2) excludes variations made under sections 29 to 43C, 57 to 59 or 92C of the Income-tax Act.

Worked examples

Example 1

Rohan Mehta was resident in India in the previous year. He held a bank account in a foreign country in his own name. He cannot explain how the funds in it were invested. Is the account within the Black Money Act, and why?

Show the solution

Rohan is resident in India in the previous year, so he is an assessee under section 2(2)(a).
The account is an asset located outside India held in his own name.
He has no explanation of the source of investment. This meets the test in section 2(11).
So it is an undisclosed asset located outside India, and its value is included under section 4(1)(c).

Answer: Yes. The account is an undisclosed asset located outside India, and its value forms part of total undisclosed foreign income and asset under section 4(1)(c).

Example 2

Meera Iyer was resident in India in the previous year 2022-23 and non-resident in the previous year 2024-25. In 2022-23 she earned foreign-source income that she did not disclose in a return, and she acquired a foreign asset for which she has no explanation of the source of investment. In 2024-25 she earned other foreign-source income that she did not disclose. Is she an assessee for the 2022-23 income? For the 2024-25 income? For the asset acquired in 2022-23?

Show the solution

Residence is tested under section 6 of the Income-tax Act, 1961, as the Black Money Act's definition states.
For the 2022-23 income: she was resident in India in that previous year, so she is an assessee under section 2(2)(a).
For the 2024-25 income: she was non-resident in that year, so section 2(2)(a) does not apply. Section 2(2)(b) covers a non-resident only if she was resident in the previous year to which the income relates, which is 2024-25 itself. She was not, so she is not an assessee for that income.
For the asset acquired in 2022-23: she is non-resident in 2024-25, but section 2(2)(b) also covers a person who was resident in the previous year in which the undisclosed asset was acquired. She was resident in 2022-23, so she is an assessee for the asset.

Answer: She is an assessee for the undisclosed foreign income of 2022-23 and for the foreign asset acquired in 2022-23 (if she has no satisfactory explanation of its source). She is not an assessee for the foreign income of 2024-25, because she was non-resident in that year.

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.

Practice questions from Black Money Act, 2015

Black Money Act 2015: Scope and Key Definitions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA FinalBlack Money Act: Scope and Charge of Tax

Black Money Act 2015: Scope and Key Definitions: frequently asked questions

What is the extent of the Black Money Act, 2015?

It extends to the whole of India. Save as otherwise provided, it came into force on 1 July 2015.

Who is an assessee under the Black Money Act, 2015?

A person resident in India in the previous year is an assessee. A non-resident or not ordinarily resident person is also an assessee if he was resident in India in the previous year of the foreign income, or in the previous year the undisclosed foreign asset was acquired.

What is an undisclosed asset located outside India?

It is an asset, including a financial interest in any entity, located outside India and held in the assessee's name or as beneficial owner. The assessee must have no explanation of the source of investment, or one that the Assessing Officer finds unsatisfactory.

Is income under this Act taxed again under the Income-tax Act?

No. Income included in the total undisclosed foreign income and asset does not form part of total income under the Income-tax Act. This avoids double taxation.