Government Opens One-Time Window for Taxpayers to Declare Undisclosed Foreign Assets

The Central Board of Direct Taxes (CBDT) has operationalised the Foreign Assets of Small Taxpayers–Disclosure Scheme (FAST-DS), 2026, giving eligible taxpayers a one-time opportunity to disclose certain foreign assets and income that were not properly reported earlier. The scheme came into force on August 16, 2026, and the disclosure window will remain open until December 31, 2026.

The initiative was announced as part of the Union Budget 2026-27 and has now been given a formal framework through the rules notified by the CBDT. The objective is to encourage voluntary compliance and provide a defined mechanism for taxpayers with relatively small overseas holdings to regularise eligible past omissions.

The scheme covers any undisclosed asset located outside India, including a financial interest in a foreign entity, or undisclosed foreign income that was chargeable to tax in India | Business Standard 

Why the Scheme Matters

India's tax framework requires resident taxpayers to disclose relevant foreign assets and income in their income-tax returns. The Income Tax Department's guidance specifically requires residents to provide details of foreign accounts and assets in the applicable schedules, including information relating to beneficial ownership and foreign-source income.

For some taxpayers, however, foreign-asset reporting can become complicated, particularly where assets were acquired while living abroad, inherited from relatives, accumulated through overseas employment or investment, or where the taxpayer had already paid tax on the underlying income but inadvertently missed the separate disclosure requirement. FAST-DS creates a limited window for eligible taxpayers to address such omissions rather than allowing them to remain unresolved.

Two Different Categories Under FAST-DS

The scheme distinguishes between different circumstances in which foreign assets or income were not properly disclosed. In cases where foreign income or assets were not previously offered to tax, the aggregate value of the relevant undisclosed foreign assets and income must not exceed ₹1 crore. Under this category, the taxpayer is required to pay tax at 30 per cent along with an additional amount equal to the tax, effectively making the total payment 60 per cent of the declared value.

A separate category covers foreign assets valued up to ₹5 crore where the underlying income or amount has already been offered to tax, or where the assets were acquired while the taxpayer was a non-resident but were subsequently not reported as required. In such cases, the prescribed payment is substantially different, with reports on the notified rules indicating a ₹1 lakh fee for eligible declarations within the specified limit.

This distinction is important because an individual who failed to disclose an overseas asset is not necessarily in the same position as someone who also failed to pay tax on the income used to acquire that asset.

What Can Be Declared?

The scheme covers a range of foreign holdings, subject to its eligibility conditions. These can include overseas bank accounts, immovable property, shares and securities, jewellery, artwork and other specified foreign assets, as well as certain undisclosed foreign income.

The rules also establish valuation mechanisms for different categories of assets. The valuation date is March 31, 2026, and specific methods have been prescribed for assets such as bank accounts, securities, jewellery and foreign immovable property. For example, the valuation of listed securities can be linked to market prices, while other assets have their own prescribed methodology. This provides a more structured basis for calculating the value of assets instead of leaving taxpayers to determine their worth through informal estimates.

Entire Process to Be Completed Online

FAST-DS has been designed as a digital process. Eligible taxpayers must submit their declaration electronically in Form 1, along with supporting documents and valuation reports wherever applicable. The tax authorities will examine the declaration and communicate the amount payable through the prescribed process.

The digital approach is consistent with the Income Tax Department's broader move towards technology-driven tax administration. The department has increasingly relied on online filing, pre-filled information, automated verification and taxpayer guidance to make compliance more efficient.

Protection After Valid Disclosure

One of the significant aspects of the scheme is the compliance protection available to taxpayers who make valid declarations and complete the required payment. Reports on the notified framework state that eligible taxpayers complying with the scheme can receive immunity from specified penalties and prosecution under the Black Money Act in respect of the assets or income covered by the declaration.

However, the protection is not an unrestricted amnesty for every foreign asset or every taxpayer. Eligibility conditions apply, and individuals whose cases fall outside the prescribed categories cannot automatically use the scheme. Taxpayers therefore need to examine the rules carefully before making a declaration.

Strengthening Financial Transparency

The scheme comes against the backdrop of India's broader efforts to improve transparency surrounding overseas financial holdings. The country's foreign-asset disclosure framework has become increasingly important as tax authorities have greater access to international financial information and use data-sharing mechanisms to identify potential discrepancies.

The Income Tax Department's own guidance makes clear that foreign assets and foreign-source income have to be appropriately reported by taxpayers to whom the disclosure requirements apply. FAST-DS therefore combines two objectives: encouraging taxpayers to voluntarily correct eligible past omissions while strengthening the overall culture of accurate foreign-asset reporting.

December 31 Deadline Makes the Window Time-Bound

The opportunity provided under FAST-DS is strictly limited. The scheme became operational on August 16, 2026, and declarations can be submitted only until December 31, 2026.

The deadline gives taxpayers with overseas financial interests a clear period in which to review their previous returns, identify any eligible omissions and determine whether they qualify for the scheme. Individuals with foreign bank accounts, investments, property or inherited overseas assets may particularly need to examine whether their reporting obligations were correctly fulfilled.

A Compliance-Focused Step

The new disclosure window can be viewed as part of the government's continuing effort to make India's tax system more transparent while encouraging voluntary compliance. Instead of leaving eligible small taxpayers uncertain about how to address certain past disclosure failures, the government has created a specific framework, defined valuation rules and a fixed period for voluntary declarations.

At the same time, taxpayers should not assume that every foreign asset automatically qualifies. The value of the asset, the taxpayer's residential status, whether the underlying income was already taxed and the circumstances in which the asset was acquired can all affect eligibility. Those with complicated cases may need professional tax advice before filing a declaration.

The MGMM Outlook 

The government’s Foreign Assets of Small Taxpayers–Disclosure Scheme (FAST-DS), 2026, offers eligible taxpayers a one-time opportunity to correct certain past omissions involving foreign assets and income. Operational from August 16, 2026, until December 31, 2026, the scheme provides a structured mechanism for taxpayers with relatively small overseas holdings to come forward voluntarily, with different provisions depending on whether the underlying income was already taxed and the value of the assets involved. By laying down specific eligibility conditions, valuation rules and an online declaration process, the initiative seeks to make voluntary compliance more straightforward while strengthening transparency around overseas financial holdings.

The scheme is particularly relevant as India's tax administration increasingly relies on international information sharing and technology-driven verification to identify discrepancies in foreign-asset reporting. At the same time, FAST-DS recognises that omissions can occur for different reasons, including inherited overseas assets, investments made while living abroad or failure to separately report assets whose underlying income was already taxed. The limited disclosure window gives eligible taxpayers an opportunity to review their records and regularise qualifying omissions under a defined framework. With the deadline set for December 31, 2026, taxpayers with overseas accounts, investments, property or other foreign holdings should carefully assess their eligibility and reporting obligations before making a declaration.

(Sources: OpIndia, Business Standard, Moneycontrol)