Economy

Black Money Act

Also: Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015

Definition

A 2015 law that taxes undisclosed foreign income and assets of Indian residents at 30%, adds a penalty of three times the tax, and makes wilful evasion punishable with up to ten years in prison.

Summary card: Black Money Act. Enacted 2015; in force from 1 July 2015. 30% tax plus 90% penalty on undisclosed foreign assets. Prosecution: up to 10 years' imprisonment. One-time compliance window in 2015 — Summary card © UPSCPrep.in

Background and evolution

Concern over Indian money parked in foreign tax havens grew in the late 2000s, after leaks of account data from banks such as HSBC in Geneva and LGT in Liechtenstein. In Ram Jethmalani v. Union of India (2011), the Supreme Court criticised the government's slow response, and in 2014 a Special Investigation Team on black money, headed by retired judge M. B. Shah, was set up on the Court's direction.

The government then introduced a dedicated law for undisclosed foreign income and assets, separate from the Income-tax Act. The Act came into force on 1 July 2015, with a three-month compliance window that let people declare such assets by paying 30% tax and 30% penalty. After the window closed, the full rates and criminal provisions applied.

Key features and provisions

Coverage: resident Indians who hold undisclosed income or assets outside India.
Tax: a flat 30% on the value of undisclosed foreign income or assets, without exemptions or deductions.
Penalty: 90% of the value (three times the tax), making the total 120%.
Prosecution: wilful evasion can lead to rigorous imprisonment of three to ten years, plus fine.
Non-disclosure: failure to report foreign assets in returns attracts a penalty of ₹10 lakh.
Link to money laundering: offences under the Act are scheduled offences under the PMLA, allowing attachment of assets.

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Last reviewed: 23 October 2026 · Original UPSCPrep.in content.