CBDT’s foreign income-asset disclosure scheme for small taxpayers: How much income tax do you actually have to pay?

A new one-time disclosure scheme for small taxpayers starts on 16 August, according to the Central Board of Direct Taxes (CBDT). Eligible taxpayers can now declare their undisclosed foreign assets or income until 31 December 2026.

This grants immunity from penalties under the Black Money Act. The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, applies in this case.

Declarations must be filed electronically using Form 1; 31 March 2026 serves as the valuation date for assets. Taxpayers must upload supporting documents and valuation reports where applicable. Authorities will verify declarations and communicate payable amounts via Form 2.

Taxpayers generally receive two months to complete their payment. An additional two-month extension is available, subject to interest charges. This interest is 1% per month for any payment delay.

Valid declarations with completed payment grant full legal immunity. This entirely protects taxpayers from further tax, penalty, or prosecution.

Taxpayers can voluntarily disclose foreign assets that are missing from tax returns. For undisclosed assets or income, the value must stay under ₹1 crore. This applies to assets held as of 31 March 2026.

Such taxpayers must pay 30% tax on the declared value. An additional matching amount brings the total payment to 60%.

"The aggregate value of the undisclosed asset located outside India (as on 31st March, 2026) and the undisclosed foreign income must not exceed ₹1 crore," said the notification.

The scheme also covers assets acquired from already-taxed income. This includes assets held while previously-classified as non-residents. Such assets simply weren't disclosed in relevant tax return schedules.

Here, assets worth up to ₹5 crore qualify for declaration. Taxpayers pay a flat fee of ₹1 lakh instead. Those exceeding ₹5 crore under this category remain ineligible.

“The aggregate value of the assets located outside India must not exceed ₹5 crore,” the CBDT notification added.

How much income tax do you have to pay?

Under Section 133, the total amount payable for a declaration consists of two components. The first is a straightforward tax of 30% on the value of any undisclosed foreign asset, or 30% on any undisclosed foreign income.

The second component is simply an amount equal to that same tax figure, effectively doubling it. In practice, this means a person pays 60% of the total declared value or income to settle the matter.

For a foreign bank account valued at ₹60 lakh, applying the 30% rate gives a tax payable of ₹18 lakh. Since an equal additional amount must also be paid, another ₹18 lakh is added, bringing this item's total to ₹36 lakh.

For an undisclosed foreign income of ₹20 lakh, the 30% tax works out to ₹6 lakh. The matching additional amount adds another ₹6 lakh, bringing this item's total to ₹12 lakh.

When both items are combined, the total tax payable comes to ₹24 lakh ( ₹18 lakh plus ₹6 lakh). The total additional amount is also ₹24 lakh.

Adding these two figures together gives a grand total payable of ₹48 lakh, which is exactly 60% of the combined ₹80 lakh in declared assets and income.