The Indian government has opened a one-time window for taxpayers to voluntarily disclose foreign assets and foreign income that didn’t make it into their tax returns. Known as the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS 2026), it’s set out in Chapter IV (Sections 130 to 144) of the Finance Act, 2026.
If you have an undisclosed foreign asset, undisclosed foreign income, or an asset that simply wasn’t reported correctly, the scheme gives you a way to come forward, pay the applicable tax or fee, and obtain the prescribed protection in respect of the income or asset validly declared, subject to the Scheme’s conditions.
A foreign asset may be covered whether it is held in the taxpayer’s own name or the taxpayer is its beneficial owner.
Undisclosed foreign income chargeable to tax in India may also be declared, subject to the Scheme’s conditions.
Who Can Use the Scheme
You’re eligible to declare under FAST-DS 2026 if:
- You were a resident of India in the relevant previous year; or
- You are currently a non-resident or RNOR (resident but not ordinarily resident), but were a resident of India in the year the undisclosed income arose, or in the year the undisclosed asset was acquired.
In other words, what matters most is your residential status in the year the income or asset relates to—not your status today. Even if you’re a non-resident now, you can still be covered if you were a resident back then.
If You’ve Recently Returned to India
This situation comes up often: someone acquires foreign assets or foreign income while living abroad, then returns to India and becomes a resident again.
Your reporting obligations depend on your residential status in the year the income arose or the asset was acquired—resident, non-resident, or RNOR—not your status today. It’s worth reviewing your residency history year by year before assuming you are, or aren’t, covered.
A returning individual’s taxability and foreign-asset reporting obligations depend on the residential status applicable for each year. Foreign income and assets are not automatically reportable merely because an individual becomes resident; the distinction between resident and ordinarily resident and RNOR must also be considered. Residency history should therefore be reviewed year by year before determining whether an earlier reporting obligation was missed.
What the Law Says
Section 132 of the Finance Act, 2026 sets out the circumstances in which a declaration can be made. Section 133 lays out who qualifies, the monetary limits, and how much is payable:
| Category | Nature of Default | Limit | Amount Payable |
|---|---|---|---|
| Category 1 | (a) Undisclosed asset located outside India; or (b) undisclosed foreign income. |
Aggregate value not exceeding ₹1 crore | 30% tax, plus an additional amount equal to 100% of that tax—an effective outgo of 60% |
| Category 2 | (a) Asset located outside India acquired from income accruing or arising outside India during the period in which the assessee was a non-resident, but not declared in the relevant Schedule on becoming a resident; or
(b) asset located outside India acquired from income offered to tax under the Income-tax Act, 1961, but not declared in the relevant Schedule in the return of income. |
Asset value not exceeding ₹5 crore | Fla
|
When You Can Make a Declaration
You can make a declaration under the scheme if:
- You failed to file a return under Section 139 of the Income-tax Act, 1961;
- Your foreign asset or foreign income wasn’t disclosed before the scheme opened; or
- Your foreign asset or income has escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961.
A declaration can be made for any previous year covered under the relevant table in Section 133, subject to the applicable thresholds and conditions.
Key Dates
The scheme was notified via Notification No. 114/2026, dated 14th August 2026. The disclosure window opened on 16th August 2026 and closes on 31st December 2026.
Valuation Date: 31st March 2026
As a general rule, an asset is valued at the higher of its acquisition cost and the prescribed market value on that date. For several asset categories, indexed cost is deemed to be the fair market value where the prescribed market valuation is not carried out. However, separate methods apply to foreign bank accounts, quoted securities, unquoted shares, immovable property and other assets. An asset-specific valuation should therefore be undertaken under Rule 3.
How to Declare
The declaration is filed online. The Income Tax Department has released an FAQ setting out the process and applicable timelines. Four forms are involved:
| Form | Purpose |
|---|---|
| Form 1 | Electronic declaration filed by the taxpayer |
| Form 2 | Order determining the amount payable |
| Form 3 | Intimation of payment by the taxpayer |
| Form 4 | Order certifying the validity of the declaration and payment |
The amount determined in Form 2 must ordinarily be paid within two months from the end of the month in which the 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. If payment is not completed within the outer time limit, the declaration becomes ineffective.
What You Get in Return
Once you make a valid declaration and pay what’s due, the declared income or asset won’t be added back to your total income under the Income-tax Act or the Black Money Act, 2015.
That said, the scheme can’t be used to reopen assessments that are already final, or to claim a set-off, rectification, or appellate relief.
A valid declaration and payment provide immunity from further tax and penalty and from prosecution under the Black Money Act in respect of the income or asset declared. The protection is limited to the matters properly disclosed and does not extend to unrelated defaults.
When the Scheme Doesn’t Apply
FAST-DS 2026 isn’t available in respect of:
- Any income or asset that directly or indirectly represents proceeds of crime in respect of which proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002; or
- Any income or asset relating to an assessment year for which assessment proceedings have already been completed under the Black Money Act, 2015.
This article provides a general overview of the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, and does not constitute legal, tax or regulatory advice. Eligibility and outcomes depend on your specific facts and residency history.
Think you may have an undisclosed foreign asset or foreign income? Talk to our advisory team before the window closes on 31st December 2026.
For an initial discussion, write to us at rajnish@sgaindia.co.in.
About the Author
CA Rajnish Shukla is the Founder Partner of M/s Shukla Gupta & Arora – Chartered Accountants, with over two decades of experience in taxation, regulatory compliance and business advisory. He advises foreign-owned and internationally operating businesses on India market entry, entity structuring, taxation, FEMA, transfer pricing and ongoing compliance.