India Opens Disclosure Window for Smaller Undisclosed Foreign Assets

India opened a one-time disclosure window on August 16 for eligible taxpayers to regularize certain foreign assets and overseas income that were not properly reported, with declarations due by December 31, 2026. The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, or FAST-DS, uses two separate tracks depending on whether the underlying income was never taxed in India or whether the asset was acquired from already-taxed income or during a period of non-residence but was omitted from a tax return.

The distinction is important because the financial cost differs sharply. Taxpayers declaring genuinely undisclosed foreign income or assets face a payment equal to 60% of the declared amount or asset value, subject to a ₹1 crore aggregate limit. A second route applies to certain foreign assets worth up to ₹5 crore that were acquired from income already offered to tax in India or when the taxpayer was a non-resident but were not disclosed in the relevant return schedule. That route carries a flat ₹1 lakh fee.

The Income Tax Department’s official FAST-DS guidance describes the program as a one-time voluntary disclosure scheme under sections 130 to 144 of the Finance Act, 2026. It says the process is entirely online and can be used by qualifying residents as well as some people who are now non-resident or resident but not ordinarily resident, provided they were resident in India in the relevant year when the foreign income arose or the asset was acquired.

Two routes separate untaxed wealth from reporting failures

Under the first route, the aggregate value of undisclosed foreign assets as of March 31, 2026, together with undisclosed foreign income, must not exceed ₹1 crore. The taxpayer pays 30% tax on the value of the undisclosed asset or the amount of undisclosed foreign income, plus an additional amount equal to that tax. The combined payment is therefore 60%.

The department’s own example shows how the calculation works. It gives a taxpayer with a foreign bank account valued at ₹60 lakh and undisclosed foreign income of ₹20 lakh. The tax is ₹24 lakh and the equal additional amount is another ₹24 lakh, producing a total payment of ₹48 lakh. The threshold applies to the combined amount covered by the declaration, rather than providing a separate ₹1 crore allowance for each asset or income item.

The second route is designed for a different type of compliance failure. It covers qualifying foreign assets that were acquired from income already offered to tax in India, or were acquired when the taxpayer was a non-resident, but were not reported in the relevant schedule of the income-tax return. The aggregate value of those assets must not exceed ₹5 crore, and the amount payable is a flat ₹1 lakh fee.

That structure reflects the government’s stated reason for creating the program. When the measure was announced in the February budget, the Finance Ministry said it was intended to address practical problems faced by groups such as students, young professionals, technology employees and relocated non-resident Indians. The government’s budget announcement specifically distinguished people who had not disclosed overseas income or assets from those who had already disclosed the income or paid the tax but failed to report the asset acquired with it.

The second category could apply, for example, to an overseas account, security or other foreign asset that should have appeared in the appropriate foreign-asset schedule even though the money used to acquire it was not untaxed income. The Income Tax Department’s current Schedule FA guidance lists foreign depository and custodial accounts, interests in overseas entities, immovable property, other capital assets, foreign accounts with signing authority, foreign trusts and other foreign-source income among the categories covered by foreign-asset reporting requirements.

Valuation rules can determine whether a taxpayer qualifies

The monetary ceilings are based on prescribed valuation rules, not simply the amount a taxpayer originally invested or the current balance shown on a statement. March 31, 2026 is the valuation date for FAST-DS. As a general rule, the fair market value of many assets is the higher of acquisition cost and the price the asset would ordinarily fetch in the open market on that date. Where a market valuation is not carried out for certain assets, the rules can use indexed acquisition cost instead.

Different asset types have their own mechanics. For quoted shares and securities, the guidance uses the higher of acquisition cost and the average of the lowest and highest quoted prices on the valuation date. If the security did not trade that day, the nearest preceding trading date is used. Foreign immovable property is generally measured using the higher of acquisition cost and open-market value, with the latter supported by a recognized valuer in the country where the property is located when such a valuation is obtained.

Foreign bank accounts receive special treatment. The department says the value is generally the sum of deposits made from the date the account was opened through the March 31 valuation date, rather than simply the closing balance. Amounts representing withdrawals that were later redeposited into the same account are excluded to avoid double counting. Where an account or part of it was already covered by an earlier declaration under the Black Money Act, only deposits made after that earlier declaration are aggregated under the stated rules.

All values must ultimately be reported in Indian rupees. For designated currencies, the guidance calls for conversion using the Reserve Bank of India’s reference rate on the valuation date. Other currencies are first converted into U.S. dollars using an appropriate central-bank or regulated-bank rate in the country concerned and then converted into rupees at the RBI reference rate.

The filing process also requires supporting evidence. A declaration is submitted electronically in Form 1, with documents showing the acquisition of the asset or earning of the income and a valuation report where one is used. The tax authority is then required to communicate the amount payable through Form 2 within one month from the end of the month in which the declaration was filed.

Payment is normally due within two months from the end of the month in which the Form 2 order is received. A further period of up to two months is available with simple interest at 1% for every month or part of a month of delay. The taxpayer reports payment and supporting proof in Form 3, after which the department issues a Form 4 order certifying payment if the filing complies with the Form 2 determination.

Immunity is tied to a valid declaration and payment

FAST-DS offers legal protection for income and assets that are validly declared and paid for under the program. The department says a completed declaration receives immunity from further tax or penalty and from prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in respect of the income or asset covered by the declaration. The declared income or amount invested in the asset is also not included again in the taxpayer’s total income under the Income-tax Act, 1961 or the Black Money Act, 2015.

The relief is not open-ended. The official guidance says the program does not apply to income or assets that directly or indirectly represent proceeds of crime where proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002. It also excludes income or assets relating to an assessment year for which assessment proceedings have already been completed under the Black Money Act.

Pending proceedings are treated differently. If an assessment under the Income-tax Act or Black Money Act is still pending for the income or asset being declared, the assessing officer is required to take the FAST-DS declaration into account when finalizing the assessment. A taxpayer also cannot use the declaration to seek rectification or revision of an assessment already made, or claim a set-off or other relief in an appeal or related proceeding for the same declared matter.

The measure was first announced in the February 1 budget as a targeted response to smaller foreign-asset reporting problems. The government’s final materials call it a one-time voluntary disclosure scheme, a narrower description than a blanket tax amnesty because the treatment depends on how the asset was funded and whether the underlying income was already taxed.

For taxpayers considering the program, December 31 is the deadline for filing the declaration itself. The payment timetable can extend beyond that date because it runs from the Form 2 order, but the Income Tax Department states that no new declaration can be filed after the year-end cutoff.