Government Launches Voluntary Scheme for Small Taxpayers to Disclose Undisclosed Foreign Assets

The Income Tax Department has provided a major opportunity for small taxpayers who hold foreign bank deposits or assets but failed to report them in their tax returns due to technical oversights. The Central Board of Direct Taxes (CBDT) has officially notified the Foreign Assets Small Taxpayer Disclosure Scheme (FAST-DS), which was introduced in the Union Budget 2026–27.

The voluntary compliance window is open from August 16 to December 31. The scheme is tailored specifically to assist individuals such as students returning from overseas education, tech workers, young professionals, and Non-Resident Indians (NRIs) who inadvertently omitted foreign assets from their filings.

Two Categories of Eligible Assets
Under FAST-DS, eligible assets will be valued based on their fair market value as of March 31, 2026. The scheme classifies disclosures into two distinct categories:

Undisclosed Assets and Income (Up to ₹1 Crore): Taxpayers can declare completely undisclosed foreign assets or income valued at up to ₹1 crore.

Procedural Reporting Defaults (Up to ₹5 Crore): For previously acquired assets valued at up to ₹5 crore—where income was earned legally but omitted from the Foreign Asset (FA) Schedule due to technical reasons—taxpayers can regularize their filings by paying a flat fee of ₹1 lakh.

Tax Structure and Complete Legal Immunity
For undisclosed foreign assets and income falling under the first category, eligible taxpayers are required to pay a 30 percent tax along with a 30 percent penalty/surcharge, amounting to an aggregate liability of 60 percent.

For instance, if a taxpayer holds ₹60 lakh in a foreign bank account along with ₹20 lakh in undisclosed foreign income (totalling ₹80 lakh), they can regularize the entire amount by paying ₹48 lakh.

Taxpayers who make disclosures under this scheme will receive full immunity from further penalties, departmental scrutiny, and prosecution under both the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, and the Income-tax Act, 1961.