Foreign assets disclosure scheme 2026: What taxpayers with unreported overseas crypto should know

The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS) is a one-time voluntary disclosure scheme that allows eligible taxpayers to disclose certain undisclosed foreign assets, foreign income or undeclared foreign assets by paying the specified tax or fee. The scheme came into force on 16 August 2026.

But can taxpayers use it to disclose unreported overseas crypto? Here's what an expert has to say on this.

Can unreported overseas crypto be disclosed?

Yes.

Isha Sekhri, Founder, Isha Sekhri & Associates LLP, explained that an “undisclosed asset located outside India” broadly covers an asset held by the assessee in their own name or as a beneficial owner where its source is unexplained or not satisfactorily explained. A virtual digital asset (VDA) should be reported under “Any other asset.”

The declaration must fall under one of the three permitted grounds: no return under section 139 was filed; the asset/income was not disclosed in a filed return; or it escaped assessment under section 147, she added.

What types of crypto/VDA are covered?

She said there is no distinction between coins, tokens, stablecoins, or NFTs. All fall under the same residuary category and are valued and taxed alike, whether held through an exchange or a self-custodied wallet.

However, trading gains, staking rewards and airdrops need to be reported separately as undisclosed foreign income, Sekhri added.

Does FAST-DS cover crypto held only with overseas exchanges?

The scheme applies only to assets and income “located outside India.” Crypto held with an Indian exchange or Indian-regulated wallet provider would ordinarily be a domestic holding and fall outside FAST-DS, she noted.

As crypto has no natural situs, Sekhri said the most defensible working position is to treat custodial holdings on a foreign exchange as located in the exchange’s jurisdiction of incorporation or regulation.

Which category does the crypto fall into?

Sekhri explained that the scheme has two relevant categories:

• Crypto bought from undisclosed income: If the VDA was acquired using income not declared in the ITR.
• Crypto bought from already-taxed income: If the VDA was purchased using income already offered to tax in India but was not disclosed in Schedule FA. Here, the issue is the reporting omission, not taxation of the principal.

Who is eligible to make disclosure in FAST-DS 2026?

An eligible assessee must have been resident in India in the relevant year. A person currently non-resident or RNOR can also qualify if they were resident when the asset was acquired, or the income was earned, Sekhri noted.

What are the monetary limits and payment rules?

Sekhri shared the following details on the applicable thresholds and payment:

Taxpayers must first value the asset as on 31 March 2026, classify it under the applicable category, and file Form 1 online. The department will issue Form 2 within a month, after which payment is due within two months, with a further two-month extension available at 1% monthly interest.

Form 3 confirms the payment, while Form 4 certifies the declaration and grants immunity. The last date to file is 31 December 2026, she explained.

How should overseas crypto be valued?

She said crypto must be valued as on 31 March 2026. Fair market value is the higher of acquisition cost and the open-market price on that date. Where valuation is not done, indexed cost applies instead.

For long-held appreciated crypto, Sekhri said valuation on the specified date is safer than indexed cost, which could understate the value beyond the permitted 20% variance. Convert via RBI-designated currency rates, or via US dollars if not RBI-designated.

Each holding should be valued individually and then aggregated by category. Taxed-source and untaxed-source crypto should not be netted against each other.

What records should taxpayers keep?

Taxpayers should gather exchange statements and transaction histories up to 31 March 2026, wallet/on-chain records, exchange KYC, bank and remittance trails showing the source of funds, past returns and Schedule FA entries, and residency evidence for NR/RNOR claims, she noted.

Sekhri cautioned taxpayers against assuming Indian-exchange holdings qualify, using today’s price instead of the valuation-date value, combining income with asset value, mixing taxed and untaxed funding, or missing the aggregate threshold and payment deadlines.

Disclaimer: This is only for informational and educational purposes. Please consult a qualified expert for the latest laws and regulations.