Section 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 4 tells you what the "total undisclosed foreign income and asset" of a previous year is made of. It has three heads, an exclusion for certain variations made under the Income-tax Act, and a rule that income counted here does not also form part of total income under that Act. The text below is read from the Act as enacted and published in the Gazette of India on 27 May 2015.
Under section 4(1), the total has three heads: foreign income not disclosed in the return furnished in time, foreign income for which a return was required but not furnished in time, and the value of an undisclosed asset located outside India. Section 4(2) leaves out certain variations made in assessing income under the Income-tax Act. Section 4(3) says income included here does not form part of total income under that Act.
Sub-section (1): the three heads
Section 4(1) begins "Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be," and lists three items.
| Head | What section 4(1) says |
|---|---|
| (a) Income not disclosed | Income from a source located outside India which has not been disclosed in the return of income furnished within the time specified in Explanation 2 to sub-section (1), or under sub-section (4) or sub-section (5), of section 139 of the Income-tax Act |
| (b) Income, no return furnished | Income from a source located outside India in respect of which a return is required to be furnished under section 139 of the Income-tax Act, but no return has been furnished within the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of section 139 |
| (c) Value of an asset | The value of an undisclosed asset located outside India |
Head (a): foreign income missing from a return that was filed
Head (a) is about a return that exists. The foreign income is not in it, and the return was furnished within the time the clause names. The clause names section 139 of the Income-tax Act, 1961, Explanation 2 to sub-section (1), and sub-sections (4) and (5), exactly as printed. This Act does not itself state those return due dates or procedures, so this article does not either.
Head (b): foreign income where no return was filed in time
Head (b) is about the opposite case. A return is required under section 139 of the Income-tax Act in respect of the foreign income, but none has been furnished within the same time. The words "in respect of which a return is required" matter: the head works only where a return was required.
Head (c): the undisclosed asset
Head (c) takes in "the value of an undisclosed asset located outside India". The phrase is defined in section 2(11) and the value is fixed under section 3(2). So an asset is not brought in by the head alone: it must meet the definition, which turns on the source of investment and the Assessing Officer's view of the explanation.
If your return has foreign income or a foreign account that you are unsure was fully reflected, an early look at your filing position helps. Our income tax return filing team can review what was and was not reported. For the reporting schedule that deals with foreign assets in the return, see our guides on Schedule FA and foreign asset reporting in the ITR; this Act takes nothing from them.
Sub-section (2): variations that stay out
Section 4(2) opens with "Notwithstanding anything contained in sub-section (1)". It says that any variation made in the income from a source outside India, in the assessment or reassessment of the total income of any previous year of the assessee under the Income-tax Act, "in accordance with the provisions of section 29 to section 43C or section 57 to section 59 or section 92C of the said Act", shall not be included in the total undisclosed foreign income.
Read plainly, where the only change in an assessee's foreign income is a variation made under those named parts of the Income-tax Act, 1961, that variation does not become undisclosed foreign income under this Act. The provision is a boundary between the two regimes. It names those sections as printed and nothing more; this article does not describe what those sections do, because the Act does not.
Note the words the sub-section ends on: "the total undisclosed foreign income". It speaks of income only, and that is how it is read here.
Sub-section (3): no double count
Section 4(3) says the income included in the total undisclosed foreign income and asset under this Act "shall not form part of the total income under the Income-tax Act". So the same foreign income is not taxed in both places. The sub-section is about income. It does not say anything about any other tax paid abroad. For relief on tax paid abroad generally, see our guide on tax on foreign income for residents and DTAA relief; this Act's own position is limited to the printed words.
An example
Anita Rao, a resident other than not ordinarily resident, files her return on time, but it does not show dividends credited to a foreign brokerage account in her name. Head (a) describes that situation: foreign income from a source outside India, not disclosed in a return furnished within the time named. If, in another year, she was required to file a return in respect of the same kind of income and filed none within the time, head (b) describes that. If the account itself is an undisclosed asset under section 2(11), head (c) describes the value. Where the officer varies a business receipt in her Indian assessment, section 4(2) leaves that variation outside, and section 4(3) keeps the foreign income charged here from also sitting in her total income under the Income-tax Act.
Need help with foreign income and your return?
Whether foreign income, a foreign account or an overseas holding was fully shown in your return is a question of facts and of the return actually filed. Our income tax return filing service can help you go through those facts and understand where you stand under this Act.
Key takeaways
- Section 4(1) has three heads: foreign income not disclosed in a timely return, foreign income with no timely return where one was required, and the value of an undisclosed asset located outside India.
- The return-time references are to section 139 of the Income-tax Act, 1961, as printed.
- Section 4(2) leaves out variations made under sections 29 to 43C, 57 to 59 and 92C of the Income-tax Act, as printed.
- Section 4(3) keeps income charged here out of total income under the Income-tax Act.
- Section 4 only builds the total; section 5 provides how it is computed and section 3 the rate.
- Later Finance Act amendments to section 4 must be checked before acting. The Income-tax Act sections are as printed in 2015; check the corresponding provision of the current income-tax law.
Read next
- Section 3: charge of tax on undisclosed foreign income and asset
- Section 5: computation of total undisclosed foreign income and asset
- Black Money Act and foreign asset disclosure
- ITR-2 filing for NRIs: Schedule FA and foreign income
Disclaimer: Based on the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 as enacted and published in the Gazette of India on 27 May 2015, and on the Rules of 2015 as notified on 2 July 2015, as consulted on 2 October 2026. Later Finance Act amendments, amendment rules and the current income-tax law should be checked. This article is general information, not legal advice; check the official text before acting.