Foreign Assets Disclosure Scheme 2026: Government Opens One-Time Window For Small Taxpayers

The Central Board of Direct Taxes (CBDT) has announced a new one-time scheme for small investors who have foreign income or hold a foreign asset but have not disclosed it in their income tax return (ITR). The CBDT announced the Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS), 2026, through a gazette notification dated August 14, 2026. This is a one-time, voluntary scheme under the Finance Act, 2026, which allows eligible taxpayers to regularise their undeclared holdings overseas. It will come into force on August 16, 2026, and will be valid till December 31, 2026. 

Two Paths To Compliance  

The scheme offers two paths to compliance. It provides two categories to disclose the undeclared holding, depending on the nature of the assets.

Category 1: This covers the undisclosed ‘foreign assets’ which were not offered to tax in India. To qualify for this category, the aggregate fair market value of the assets and income must not be more than Rs 1 crore. This fair market value (FMV) will be calculated based on the March 31, 2026 valuation.

Category 2: This category is for declaring the ‘undisclosed foreign assets’ that may have been acquired from taxed income or when the individual was a non-resident but were not included in the relevant schedules of Indian tax returns. Under this category, the threshold is higher. This category allows declarations of assets with an aggregate value of up to Rs 5 crore.

Cost For Taxpayers

The two schemes mandate different financial obligations on taxpayers.

For Category 1, taxpayers are required to pay a total of 60 per cent of the asset’s value, including the 30 per cent tax and a mandatory 100 per cent (means the equal amount of tax - 30 per cent) penalty on that tax. That comes out to be a total of 60 per cent of the value of the undisclosed asset. For instance, to regularise an undisclosed foreign bank account valued at Rs 60 lakh would require a total payment of Rs 36 lakh, including the Rs 18 lakh (30 per cent tax) and Rs 18 lakh (equal amount of penalty).

In category 2, a taxpayer needs to pay a flat fee of Rs 1 lakh, provided that the Rs 5 crore limit of asset value is not exceeded. The government has clarified that if this specific Rs 5 crore income/asset threshold is exceeded, the taxpayer will become ineligible to take benefit of the scheme. For instance, if a taxpayer’s aggregate value of the undisclosed foreign assets is Rs 6.50 crore, this makes the person ineligible for the scheme.  

How Beneficiaries Can Take Advantage

To benefit from the scheme, potential applicants need to follow the process laid down by the CBDT. This will be a totally online process managed by the Principal Director General of Income-tax (Systems). It will involve the following steps:

• Filing Form 1: The declarant is required to first submit Form 1 online, along with the supporting documents like valuation reports for property, jewellery, and proofs of acquisition.

• Payment Order: The authorities, within one month of filing, will issue Form 2, an electronic order specifying the amount the taxpayer needs to pay.

• Making Payment: The taxpayer will then be required to make the payment within two months. However, there is a provision for a further two-month extension if required, but that will incur a simple interest of 1 per cent per month on the taxpayer.

• Final Certification: After making the payment, the declarant will be required to inform the authorities by submitting Form 3. The authorities will verify the payment and issue Form 4, certifying the validity of the payment and declaration.

Limited Period To Get Immunity

This scheme, FAST-DS, provides an opportunity to small taxpayers who may have omitted declaring their foreign assets in their ITR to achieve legal protection and immunity from prosecution, or from levy of any further taxes or penalties under the Black Money Act, 2015.

Notably, the scheme is not a blanket amnesty as it does not apply to assets acquired from proceeds of crime under the Prevention of Money Laundering Act, 2002, or those already subject to assessment under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

As the scheme is open for a limited period, the Income Tax Department has urged taxpayers to audit their international income and assets to meet the deadline of December 31, 2026.