A Complete Guide for Taxpayers
Introduction
Many Indian taxpayers hold a foreign bank account, an inherited property abroad, a handful of foreign shares, or income earned overseas — and, often without any intent to evade tax, never got around to reporting it in their Indian income-tax return. Under the existing law, such gaps fall within the reach of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Black Money Act), which was designed to deal with serious concealment and carries correspondingly severe consequences.
Recognising that a large number of these cases involve modest amounts and unintentional lapses rather than deliberate evasion, the government has introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS) — a one-time voluntary disclosure window under Chapter IV (sections 130 to 144) of the Finance Act, 2026, backed by the Foreign Assets of Small Taxpayers Disclosure Scheme Rules, 2026, notified by the CBDT on 14th August 2026. It lets eligible taxpayers come forward, declare the asset or income, pay a specified amount, and walk away with immunity — without going through the far harsher Black Money Act route.
Quick Details
| Particular | Detail |
| Legal basis | Sections 130–144, Chapter IV, Finance Act, 2026, read with the FAST-DS Rules, 2026 |
| Date of commencement | 16th August 2026 |
| Last date to file declaration | 31st December 2026 (no extensions contemplated) |
| Valuation date | 31st March 2026 |
| Declaration form | Form 1, filed electronically |
| Administering authority | Principal Director General / Director General of Income-tax (Systems) |
| Monetary ceiling — undisclosed asset/income | ₹1 crore |
| Monetary ceiling — reporting lapse on already-taxed asset | ₹5 crore |
| Amount payable — undisclosed asset/income | 30% tax + equal additional amount (effectively 60%) |
| Amount payable — reporting lapse | Flat ₹1 lakh |
Who Must Take Benefit of This Scheme
FAST-DS is aimed squarely at what its name suggests — small taxpayers, not large-scale concealment cases. You should seriously consider using this Scheme if you fall into any of these situations:
- You hold a foreign bank account, foreign property, foreign shares or securities, jewellery, or any other asset located outside India, and never reported it in any Indian tax return.
- You earned income from a source outside India — interest, rent, dividends, capital gains, or otherwise — that was taxable in India but was never offered to tax.
- You did report a foreign asset in your books or elsewhere, or it was acquired while you were a non-resident, but it never made it into the specific foreign-assets schedule of your income-tax return.
- You are worried about a past lapse being picked up later — for instance through automatic exchange of financial account information between countries — and want to regularise your position on your own terms rather than waiting to be caught.
In each of these cases, coming forward voluntarily under FAST-DS is almost always preferable to the alternative of the tax department discovering the gap independently, because the Scheme trades a fixed, known cost today for the open-ended exposure of tax, penalty and possible prosecution later.
Applicability
Who can declare
You qualify as an eligible “assessee” if you are resident in India (under section 6 of the Income-tax Act) for the relevant previous year, or if you are currently a non-resident or resident-but-not-ordinarily-resident (RNOR) but were resident in India either in the year the income relates to or the year the asset was acquired. A change in your residential status since then does not disqualify you.
When it applies
A declaration is available where you failed to furnish a return altogether, failed to disclose the asset or income in a return you did file before the Scheme commenced, or where the asset or income would otherwise be treated as having escaped assessment under section 147 of the Income-tax Act.
Monetary thresholds
Applicability splits into two tracks, and you must check the one relevant to you:
- Track 1: An undisclosed foreign asset or undisclosed foreign income that was never offered to tax — available only where the combined value does not exceed ₹1 crore as on the valuation date.
- Track 2: A foreign asset already offered to tax, or acquired while you were non-resident, but not declared in the relevant schedule of the return — available only where the aggregate asset value does not exceed ₹5 crore.
Cross the applicable ceiling and the Scheme is unavailable for that declaration entirely; there is no scaled-down benefit.
Where it does not apply, regardless of value
The Scheme is off the table if the income or asset represents proceeds of crime with proceedings already initiated or pending under the Prevention of Money-Laundering Act, 2002, or if assessment proceedings for that year have already been completed under the Black Money Act, 2015.
Determination of Tax Liability
Track 1 — undisclosed asset/income
The amount payable is the aggregate of tax at 30% of the declared value, plus a further amount equal to that tax — effectively a 60% levy on the total.
Illustration:
| Description | Value / Income | Tax (30%) | Additional 100% of tax | Total payable |
| Foreign bank account | ₹60 lakh | ₹18 lakh | ₹18 lakh | ₹36 lakh |
| Foreign income | ₹20 lakh | ₹6 lakh | ₹6 lakh | ₹12 lakh |
| Total | ₹24 lakh | ₹24 lakh | ₹48 lakh |
Track 2 — reporting lapse
The amount payable is a flat ₹1 lakh, irrespective of whether the asset is worth ₹50 lakh or the full ₹5 crore ceiling.
Valuing the asset
Everything is valued as on 31st March 2026. As a general rule, fair market value is the higher of the original cost of acquisition and the open-market price on the valuation date (ideally backed by a recognised valuer’s report); where no such valuation is done, the indexed cost of acquisition applies instead.
Foreign bank accounts follow a distinct rule — value is the sum of all deposits made into the account since it was opened, up to the valuation date, excluding amounts that are really a withdrawal being redeposited, and excluding deposits already covered by an earlier Black Money Act declaration.
Paying the amount
After you file Form 1, the tax authority verifies it and issues an order in Form 2 within a month, stating the amount payable. You then have two months from the end of that month to pay. A further two-month grace period is available if needed, but it carries simple interest of 1% per month of delay. There is a hard outer limit of four months from the end of the month Form 2 was issued — beyond that, the Scheme benefit is lost for that declaration.
What If a Taxpayer Does Not File This Form
Choosing not to file leaves the underlying exposure exactly where it is today — and that exposure is considerably more severe than the cost of using FAST-DS.
- Continued exposure under the Black Money Act, 2015: Undisclosed foreign income and assets attract tax at a flat rate under that Act, along with a substantial penalty on top of the tax, and the Act also carries criminal prosecution provisions with imprisonment for serious defaults. None of this is capped in the way FAST-DS’s payable amounts are.
- Continued exposure under the ordinary Income-tax Act: including reassessment of the relevant year under section 147, penalty for underreporting or misreporting of income, and prosecution provisions for wilful default, in addition to the ordinary tax and interest.
- Rising detection risk: India exchanges financial account information with a large number of countries under international automatic-exchange-of-information frameworks, so foreign bank accounts, custodial holdings and similar assets are increasingly visible to Indian tax authorities independent of what a taxpayer chooses to disclose. A lapse that goes unreported today does not necessarily stay unnoticed.
- A firmly time-bound, one-time window: FAST-DS is explicitly a one-time Scheme with a fixed closing date of 31st December 2026. Once that date passes, this particular route — with its capped 60% levy or flat ₹1 lakh fee and clean immunity — is not available again, and any subsequent disclosure or detection would fall back on the ordinary, harsher provisions described above.
For anyone holding an unreported foreign asset or income within the Scheme’s thresholds, the practical takeaway is straightforward: the cost of coming forward now is fixed and known, while the cost of not doing so is open-ended. It is worth reviewing your foreign holdings and speaking to a tax professional well before the December deadline, since both the eligibility rules and the valuation mechanics leave little room for error.
This article is for general informational purposes based on the Foreign Assets of Small Taxpayers Disclosure Scheme Rules, 2026 and related FAQs, and does not constitute tax advice. Please consult a qualified tax professional for guidance on your specific facts.