Big relief for taxpayers! Govt opens one-time disclosure window for unreported foreign assets; check penalty, due date

The income tax department announced on Saturday, August 15, that declarations under the Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS) will open tomorrow and can be filed until the end of December.

Notifying the rules of the tax compliance scheme, the Central Board of Direct Taxes (CBDT) said that it "enables eligible taxpayers to declare certain undisclosed foreign assets, undisclosed foreign income, or undeclared foreign assets, on payment of a specified tax or fee".

The one-time disclosure window comes into effect from August 16 and remains open for declarations until December 31, 2026.

Who should opt for this scheme?

The voluntary disclosure of foreign asset scheme is meant for small taxpayers such as students, young professionals, tech employees, and relocated non-Indian residents (NRIs). This provision was announced in the 2026-27 Union Budget.

How much penalty will be applicable?

Taxpayers opting for the scheme will have to pay 30% tax, along with an additional levy of a similar amount.

The fair market value of the assets proposed to be declared under the scheme will be calculated as of March 31, 2026.

Broadly, taxpayers can make declarations under two categories:

• Undisclosed foreign assets or income: This covers an undisclosed asset located outside India or foreign income which was not offered to tax. The aggregate value of such undisclosed assets should not exceed ₹1 crore.
• Foreign assets not disclosed in the ITR: This covers foreign assets that were already offered to tax or acquired when the taxpayer was a non-resident, but were not reported in the relevant schedule of the income tax return. The monetary value of such assets should not exceed ₹5 crore, and a fee of ₹1 lakh will apply on such declarations.

The total amount payable under the scheme will include 30% tax on the value of the undisclosed foreign asset or income declared, along an additional levy equal to the tax amount paid.

For example, if an undisclosed foreign bank account is valued at ₹60 lakh and the undisclosed foreign income is worth ₹20 lakh, the aggregate tax payable would be ₹48 lakh, according to CBDT's FAQ section.

Why investors should consider this scheme?

The scheme offers taxpayers immunity from further tax, penalty, and prosecution, under the Black Money Act, 2015, for the income or foreign assets declared under it. This specifically applies to those people who failed to disclose foreign assets or income in previous years.

Additionally, the income or amount invested in the declared asset under this scheme will not be included in the total income of the taxpayer under the Income-tax Act, 1961 or the Black Money Act, 2015.

(With inputs from PTI)