The new FAST-DS scheme gives eligible taxpayers a limited opportunity to disclose certain foreign assets or income by paying tax or a prescribed fee, with protection from further tax, penalties and prosecution under specified conditions.
The government has introduced a one-time disclosure mechanism for taxpayers who have not reported certain foreign assets or income in their income-tax returns. The Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS) became effective on August 16, 2026, with taxpayers allowed to submit declarations until December 31, 2026.
The scheme, notified through the Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026, is aimed at addressing reporting issues faced by small taxpayers who hold relatively modest overseas assets or income.
Who can use the FAST-DS scheme?
The disclosure window broadly covers two categories.
Category 1: Undisclosed foreign assets or income up to ₹1 crore
Taxpayers can disclose undisclosed foreign income or assets located outside India where the aggregate value does not exceed ₹1 crore.
For this category, the taxpayer has to pay:
- 30% tax on the fair market value of the undisclosed asset or income
- An additional 30% amount in lieu of penalty
After complying with the scheme, the taxpayer can receive immunity from prosecution and further tax or penalty relating to the declared asset or income, subject to the conditions of the scheme.
Category 2: Certain foreign assets up to ₹5 crore
The second category covers foreign assets worth up to ₹5 crore in specified circumstances.
This includes assets acquired:
- From income earned outside India while the taxpayer was a non-resident, but which was not reported after becoming a resident of India; or
- From income that had already been offered to tax in India but where the foreign asset was omitted from the relevant schedule of the income-tax return.
For qualifying declarations under this category, the prescribed payment is a ₹1 lakh fee, with immunity from penalty and prosecution subject to the scheme's conditions.
What assets can be disclosed?
The scheme can cover various types of foreign assets and income, including:
- Foreign bank accounts
- Overseas immovable property
- Jewellery
- Art and other artistic works
- Shares and securities
- Other specified foreign assets
- Undisclosed foreign income
However, eligibility depends on the category and the aggregate value of the assets or income.
How much could a taxpayer have to pay?
The financial impact can be substantial for taxpayers falling under the first category.
For example, if an undisclosed foreign bank account is valued at ₹60 lakh and the taxpayer has another ₹20 lakh of undisclosed foreign income, the aggregate amount is ₹80 lakh.
The tax calculation would be:
| Particulars | Amount |
|---|---|
| Tax on ₹60 lakh asset @ 30% | ₹18 lakh |
| Tax on ₹20 lakh income @ 30% | ₹6 lakh |
| Total tax | ₹24 lakh |
| Additional amount in lieu of penalty | ₹24 lakh |
| Total payable | ₹48 lakh |
The example illustrates that the scheme does not necessarily mean a taxpayer can regularise an undisclosed asset by paying only a small fee.
A potentially cheaper route for certain former NRIs
The second category could be particularly relevant for individuals who became Indian residents after acquiring overseas assets while they were non-residents.
For instance, if a person acquired a foreign property while earning income abroad as a non-resident and subsequently became an Indian resident but failed to report the property in the applicable tax-return schedule, a qualifying property valued at ₹3 crore could fall within the ₹5-crore category.
Under the example provided by the tax authorities, the prescribed payment in such a case would be ₹1 lakh, provided all eligibility conditions are satisfied.
₹5 crore is an aggregate limit
Taxpayers should not assume that each foreign asset gets a separate ₹5-crore limit.
The rules provide for an aggregate-value test.
For example, if foreign mutual fund units are valued at ₹2.5 crore and overseas shares are worth ₹4 crore, their combined value would be ₹6.5 crore.
Since this exceeds the ₹5 crore threshold, the taxpayer would not qualify under the second category.
Valuation date fixed at March 31, 2026
For assets being disclosed under the scheme, the valuation date is March 31, 2026.
The fair market value generally has to be determined with reference to that date. The rules provide that the higher of the acquisition cost and the amount the asset could ordinarily fetch in the open market may be considered, subject to the prescribed valuation methodology.
Where appropriate, taxpayers may need valuation support from a recognised valuer in the country where the asset is located.
Declaration has to be filed electronically
Eligible taxpayers are required to submit the declaration electronically through Form 1 to the income-tax authority.
The declaration window opens on August 16, 2026, and closes on December 31, 2026.
This makes the scheme a time-bound opportunity rather than a continuing disclosure mechanism.
Payment deadline is also important
Once the income-tax authority passes the payment order, the taxpayer generally gets two months to make the required payment.
A further period may be available in specified circumstances, but delayed payment attracts simple interest of 1% for every month or part of a month of delay.
The rules also prescribe an outer time limit. Failure to make payment within the permitted period can result in the taxpayer losing the benefit of the scheme.
Not every foreign asset can be regularised
The FAST-DS window is not a blanket amnesty for all undisclosed overseas assets.
The scheme does not apply where the income or asset represents proceeds of crime in cases covered by proceedings under the Prevention of Money-laundering Act.
It also does not cover certain assets or income connected with assessment years where proceedings under the Black Money Act have already been completed.
Therefore, taxpayers with overseas assets should first determine the source of funds, date of acquisition, residential status at the relevant time, reporting history and current fair market value before making a declaration.
Why the scheme matters
The government had announced the one-time foreign-asset disclosure window in the Union Budget with the objective of helping smaller taxpayers resolve practical compliance issues involving overseas assets.
The measure could be particularly relevant to people such as former NRIs, students, young professionals and employees who worked overseas, especially where an asset was legally acquired but subsequently omitted from the appropriate tax-return disclosure.
For taxpayers who believe they may qualify, the key issue is not simply the value of the foreign asset. The manner in which the asset was acquired and whether the underlying income was already taxed can significantly change the amount payable.
With declarations open only until December 31, 2026, eligible taxpayers will need to assess their foreign assets carefully before deciding whether to use the one-time window.
Important Disclaimer
This article is provided for general informational and educational purposes only. It is not investment advice or a recommendation to buy or sell any security. Stock markets involve risk, and investors should conduct their own research and consider their financial circumstances and objectives before making investment decisions.
Need Professional Tax Guidance?
Investment, business and personal financial decisions can also have tax and compliance implications. If you need professional assistance with taxation, GST or income-tax matters, you can contact Kunj Tax Advisory.
For professional assistance, visit the Kunj Tax Advisory contact page.
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