Foreign assets disclosure scheme: Who is eligible, what it means for small taxpayers & tax payable

A forgotten overseas bank account, unreported foreign shares or ESOPs received from a multinational employer can turn into a serious tax-compliance issue if the asset or income is not properly disclosed in India.

The government’s new Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS), 2026, is designed to give eligible taxpayers a limited window to clean up such past omissions.

The Central Board of Direct Taxes (CBDT) has notified the FAST-DS Rules, 2026 and issued a detailed FAQ to explain who can use the scheme, what can be disclosed, how much taxpayers have to pay and what protection they receive after making a valid declaration.

What is FAST-DS 2026? 

FAST-DS is a one-time disclosure mechanism for eligible taxpayers who have either failed to report certain foreign assets or have not offered foreign income to tax.

The scheme covers three broad categories:

• Undisclosed foreign income. 
• Undisclosed assets located outside India. 
• Certain foreign assets that were acquired from income already taxed in India or while the taxpayer was a non-resident, but were subsequently not reported in the relevant foreign-asset schedule of the income-tax return. 

The government has positioned the scheme as a compliance opportunity for smaller taxpayers who may have made inadvertent reporting mistakes rather than as a broad amnesty for large undisclosed overseas wealth.

Who can use the scheme? 

The scheme can cover a person who is or was a resident of India during the relevant period and meets the prescribed conditions. This can include taxpayers who are currently non-residents or not ordinarily resident if they were resident when the relevant foreign income arose or the asset was acquired.

The FAQ specifically identifies situations involving employees of multinational companies who received foreign ESOPs or RSUs, former students who retained overseas bank accounts, returning non-residents with foreign savings or insurance policies, and employees who were deputed abroad.

What is the ₹1 crore limit?

For undisclosed foreign income and undisclosed foreign assets, the scheme applies where the aggregate value does not exceed ₹1 crore as on March 31, 2026.

For an undisclosed foreign asset, the scheme is relevant where the taxpayer cannot satisfactorily explain the source of the investment. The asset can include a financial interest in an overseas entity.

What about assets that were already taxed? 

There is a separate, more generous threshold for certain foreign assets that were acquired from income already offered to tax in India or during a period when the taxpayer was a non-resident.

In such cases, the asset can have a value of up to ₹5 crore as on March 31, 2026, subject to the conditions of the scheme.

This distinction is important: FAST-DS is not treating an unreported asset whose underlying funds were already taxed in India in the same way as an asset for which the source of funds itself remains unexplained.

How much will taxpayers have to pay? 

The cost depends on the nature of the disclosure.

For undisclosed foreign income or an undisclosed foreign asset within the ₹1 crore threshold, the taxpayer has to pay:

30% tax + an additional amount equal to 100% of that tax = effectively 60% of the relevant value.

For example, if an eligible undisclosed foreign asset is valued at ₹50 lakh, the tax component would be ₹15 lakh and the additional amount would be another ₹15 lakh, taking the total to ₹30 lakh.

For specified foreign assets that were acquired from income already taxed in India or while the taxpayer was a non-resident but were not reported, the payment is instead a flat fee of ₹1 lakh, provided the ₹5 crore threshold and other conditions are met.

Is the ₹1 lakh fee charged every year? 

Not necessarily. If the same foreign asset remained undisclosed over several years, the FAQ clarifies that the ₹1 lakh fee is charged only once, for the first year of non-disclosure. If separate assets were acquired in different years, the fee can apply to the respective assets based on the applicable rules.

What protection does FAST-DS provide? 

One of the biggest attractions of the scheme is the immunity available to a taxpayer who makes a valid declaration and pays the prescribed amount.

The scheme provides immunity from tax, penalty and 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.

However, this protection is conditional. A declaration can become invalid if material particulars are found to be false or if the taxpayer violates the conditions of the scheme.

What cannot be disclosed under FAST-DS? 

The scheme is not a blanket route for regularising every form of overseas wealth.

It excludes income or assets representing proceeds of crime under the Prevention of Money Laundering Act, 2002. It also does not apply where assessment proceedings under the Black Money Act have already been completed.

This means taxpayers facing an existing completed Black Money Act assessment cannot simply use FAST-DS to close that matter.

How will taxpayers make a declaration? 

Declarations are to be made electronically in the prescribed form and verified in the prescribed manner. The Income Tax Department will electronically verify eligibility and whether the declaration complies with the scheme.

The scheme also provides a mechanism for the tax authority to communicate the amount payable after examining the declaration.

Taxpayers should therefore keep supporting documents relating to the acquisition and valuation of overseas assets, the source of funds and previous tax treatment before making a declaration.

What about foreign assets that are already required to be reported? 

FAST-DS does not replace the normal requirement to disclose foreign holdings.

Resident taxpayers who are required to report foreign assets continue to have to provide details through Schedule FA in their income-tax returns. This covers categories such as foreign bank and custodial accounts, financial interests in overseas entities, foreign immovable property, other capital assets, signing authority in foreign accounts and interests in foreign trusts.

FAST-DS is therefore best understood as a mechanism to address specified past omissions, rather than permission to stop reporting foreign assets going forward.

When can taxpayers file? 

The law provides for the scheme to come into force on a date appointed by the Central Government through notification in the Official Gazette. The declaration window and last date are likewise to be governed by the notified period.

That makes it important for taxpayers to distinguish between the notification of the rules and the actual filing window. The rules provide the framework, but taxpayers should check the Income Tax Department's subsequent notifications before attempting to file.

Why does FAST-DS matter? 

For taxpayers with relatively small overseas holdings, the consequences of a reporting mistake can be disproportionate to the size of the asset. A dormant foreign bank account, an overseas investment received while working abroad or foreign employee stock can remain unnoticed until information-sharing mechanisms bring it to the tax department's attention.

FAST-DS effectively creates a route to address specified legacy omissions under a defined payment structure and with immunity from penalty and prosecution for the matters covered by a valid declaration.