I-T Relief for Employees Abroad: No Jail Time for Failing to Report Low-Value Foreign Assets

The Income Tax Department has announced that prosecution will not be launched against individuals who fail to disclose foreign financial assets up to ₹20 lakh, as per news reports. The clarification was issued through a circular dated August 20, 2025, by the Central Board of Direct Taxes (CBDT).

Earlier Rules

Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, non-disclosure of overseas assets could attract imprisonment of 6 months to 7 years. In addition, a penalty of up to ₹10 lakh was imposed for such failures. These provisions applied even to employees and professionals with small-value assets abroad.

Change in Threshold

The new rule specifies that prosecution will not apply if penalties under Sections 42 and 43 of the Black Money Act are not imposed or imposable for assets other than immovable property, where the total value does not cross ₹20 lakh at any time during the relevant year. Immovable property located overseas remains outside the scope of this relaxation.

Read more: Income Tax Department Sets Sept 30, 2025 as Deadline for TDS/TCS Relief on Inoperative PANs!

Previous Relaxation Limited to ₹5 Lakh

Before this update, relief was available only if the value of undisclosed foreign bank accounts was less than ₹5 lakh in the relevant year. The expansion to ₹20 lakh significantly increases the reporting threshold and covers other types of movable assets as well.

The issue has often impacted employees of multinational companies and IT professionals working overseas. Many have foreign bank accounts, pension accounts, or employee stock option plans (ESOPs) opened as part of their assignments. Failure to report such assets in income-tax returns has previously drawn penalties.

In the July 2024 Union Budget, the finance ministry had already provided relief by removing the ₹10 lakh penalty for non-reporting of movable foreign assets up to ₹20 lakh from FY25 onwards. The latest CBDT circular now extends this to prosecution provisions.

Conclusion

With this change, individuals holding low-value movable assets abroad up to ₹20 lakh will not face a penalty or prosecution for non-disclosure. The relief is intended to reduce compliance issues for employees deputed overseas.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.