One-Time Window For Undisclosed Foreign Assets
The government has launched a new one-time disclosure scheme allowing eligible small taxpayers to voluntarily declare certain undisclosed foreign assets and foreign income and bring them into tax compliance.
The Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS), 2026 comes into force from August 16 and provides taxpayers with a limited window to make their declarations.
The deadline for filing a declaration is December 31, 2026.
Who Can Benefit From The Scheme?
The scheme is aimed at taxpayers who may have failed to disclose foreign assets or income in their tax returnsincluding people with relatively small overseas holdings.
It could be particularly relevant to Indian professionals holding foreign ESOPs or shares, people who previously worked or studied abroad, returned non-residents and individuals who continue to hold old overseas bank accounts or other foreign assets.
The scheme is intended to address both undisclosed foreign assets and certain cases where assets were legitimately acquired but were not properly reported in tax returns.
Foreign Assets Worth Up To ₹1 Crore
Under one category, eligible taxpayers can disclose undisclosed foreign assets or foreign income where the aggregate value does not exceed ₹1 crore.
The amount payable under this route effectively works out to 60% of the valuecomprising 30% tax and an additional 30% penalty.
The valuation is based on the prescribed rules, with March 31, 2026, serving as an important valuation date.
₹5 Crore Limit For Reporting Mistakes
A separate provision covers foreign assets worth up to ₹5 crore where the assets were acquired from income that had already been taxed or during a period when the individual was a non-resident, but were subsequently not properly reported.
In such cases, eligible taxpayers can regularise the assets by paying a flat fee of ₹1 lakhsubject to the conditions of the scheme.
This provision could be particularly useful for people who acquired foreign investments or bank accounts while living overseas and later became Indian residents.
How Will Taxpayers File?
Declarations under the scheme have to be submitted electronically using the prescribed Form 1 through the income-tax system.
The tax authorities will examine the declaration and determine the amount payable under the applicable category.
After the required payment is made, the taxpayer will receive certification under the scheme.
Immunity From Penalties And Prosecution
One of the biggest benefits of FAST-DS is the legal protection available to taxpayers who make a valid declaration and comply with the payment requirements.
Eligible taxpayers can receive immunity from further tax demands, penalties and prosecution under the applicable provisions of the Black Money Act.
This makes the scheme particularly significant for taxpayers who may have carried old foreign assets without properly reporting them.
Not Everyone Will Qualify
The disclosure window is not available in every situation.
Certain cases, including matters involving proceeds of crime and cases where relevant proceedings have already been completed, are excluded from the scheme.
Taxpayers will therefore need to carefully establish the source, ownership and valuation of their foreign assets before making a declaration.
Why The Government Introduced FAST-DS
The scheme is aimed at improving voluntary tax compliance while giving smaller taxpayers an opportunity to correct historical reporting failures.
Foreign asset reporting can be complicated, particularly for people who have worked overseas, received employee stock benefits from multinational companies or retained small overseas accounts after returning to India.
Instead of facing potentially severe penalties and prolonged legal proceedings, eligible taxpayers now have a one-time mechanism to regularise qualifying assets.
December 31 Is The Deadline
The disclosure window is relatively short.
Eligible taxpayers can make declarations from August 16 to December 31, 2026after which no new declaration can be filed under the scheme.
For taxpayers with foreign assets or income that may not have been properly disclosed in earlier returns, the new scheme provides a limited opportunity to review their past filings and regularise qualifying holdings.
Summary
The government has launched the Foreign Assets of Small Taxpayers-Disclosure Scheme 2026, offering eligible taxpayers a one-time opportunity to declare certain undisclosed foreign assets and income. The scheme begins on August 16 and closes on December 31, 2026. Undisclosed assets or income up to ₹1 crore can attract an effective 60% tax and penalty, while certain legitimately acquired but unreported foreign assets up to ₹5 crore can be regularised for a flat ₹1 lakh fee. Valid declarations can provide immunity from penalties and prosecution.