FAST-DS 2026: A One-Time Opportunity to Regularise Undisclosed Foreign Assets/Income

 

Why India's latest disclosure scheme matters far beyond tax collections

For years, one of the most uncomfortable conversations tax advisors have had with clients begins with a seemingly harmless statement:

"I didn't know I had to report that account."

 

The account may be a student bank account left open after studying overseas. It could be RSUs granted by a foreign parent company, a brokerage account linked to employment abroad, or savings accumulated during an NRI stint years earlier.

 

In many cases, the underlying money was legitimate, earned through disclosed sources, and taxed appropriately. Yet the failure to report foreign assets in the Indian tax return could potentially expose taxpayers to the harsh consequences of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

 

Recognizing this disconnect, the Government has introduced the Foreign Assets of Small Taxpayers -Disclosure Scheme, 2026 (FAST-DS), a limited-period opportunity that opened on 16 August 2026 and will remain available until 31 December 2026.

More than a disclosure scheme, FAST-DS reflects a shift in how foreign asset compliance is being approached in India.

Understanding the Purpose Behind FAST-DS

FAST-DS has been introduced to help taxpayers voluntarily correct past non-disclosures of foreign assets or income. While the Black Money Act was originally intended to target undisclosed offshore wealth, many cases today involve genuine reporting mistakes by students, employees, and returning NRIs. Recognizing this, the government has provided a one-time opportunity for eligible taxpayers to regularize such omissions, pay the prescribed tax or fee, and obtain relief from penalties and prosecution.

At a Glance

• Commencement: 16^th August, 2026
• Last date to file a Declaration: 31^st December, 2026
• Valuation date of Assets: 31^st March, 2026
• Administered fully online, by Principal DGIT

A. Who can use this Scheme:

The scheme is open to “Taxpayer” who is either:

• Resident in India in the relevant previous year; or
• A non-resident, or resident but not ordinarily resident (RNOR), in the relevant previous year, provided they were resident in India either in the year the undisclosed foreign income relates to, or in the year the undisclosed foreign asset was acquired.

In short, even someone who has since moved abroad and is presently a non-resident can still use the Scheme, so long as they were resident in India at the relevant time the income arose or the asset was acquired.

A declaration can be made where the assessee has failed to file a return under Section 139 of the Income-tax Act, 1961, or failed to disclose the asset/income in a return already filed, or where the income/asset would otherwise be treated as having escaped assessment under Section 147 of the Income-tax Act, 1961.

B. Two Different Categories of Non-Disclosures:

The Scheme recognises two distinct categories of declaration, each with its own threshold.

 

Category 1 - Wholly Undisclosed Assets or Income

An undisclosed foreign asset or undisclosed foreign income that has never been offered to tax at all. Eligible only where the aggregate value of the asset (as on 31st March 2026) plus the undisclosed income does not exceed INR1 crore.

 

Category 2 - Foreign Assets whose source is duly explained

An asset located outside India that was already offered to tax (or acquired when the assessee was a non-resident) but simply never reported in the relevant schedule of the income-tax return. Eligible where the aggregate value of such assets does not exceed INR5 crore.

Assets whose value exceeds INR5 crore fall outside the Scheme altogether, there's no partial or proportionate relief available above that threshold.

C. Amount Payable under this Scheme:

Category 1 -

The amount payable is the aggregate of:

1. tax at 30% of the value of the undisclosed asset (or of the undisclosed income), plus
2. an additional amount equal to that tax payable in point (i).

Illustration: An undisclosed foreign bank account valued at INR 60 lakh, together with undisclosed foreign income of INR 20 lakh, works out as follows:

Description	Value/Income	Tax Payable (30%)	Additional 100% of Tax	Total Payable
Foreign Bank Account	INR 60  lakh	INR 18 lakh	INR 18 lakh	INR 36 lakh
Foreign Income	INR 20 lakh	INR 6 lakh	INR 6 lakh	INR 12 lakh
Total	INR 80 lakh	INR 24 lakh	INR 24 lakh	INR 48 lakh

Category 2 - Sources explained; only FA schedule disclosure omitted:

It covers a foreign asset acquired from income accruing or arising outside India while the assessee was non-resident, where the asset was not declared in the relevant Schedule of the return on becoming resident. It also covers a foreign asset acquired from income already offered to tax under the Income-tax Act, 1961 but not declared in the relevant Schedule. The aggregate value ceiling is INR5 crore.

The amount payable under Category 2 is a fee of INR1 lakh.

A fee, not tax and not a penalty.

D. Valuation of Foreign Assets:

Fair market value is the higher of the cost of acquisition and the open-market price of the asset on 31 March 2026, supported by a report from a valuer recognised by the government of the country where the asset is located. Where that open-market valuation is not carried out, the indexed cost of acquisition is deemed to be the fair market value.

Asset-class valuation map under Rule 3:

• Bullion, jewellery, precious stones - higher of cost and open-market price on the valuation date. Rule 3(1)(a)
• Archaeological collections, paintings, sculptures, artistic work - higher of cost and open-market price. Rule 3(1)(b)
• Quoted shares and securities - higher of cost and the average of the lowest and highest quoted price on the valuation date; if there was no trading that day, the nearest preceding trading date. Rule 3(1)(c)(i)
• Unquoted equity shares - higher of cost and (A + B − L) × PV ÷ PE. Rule 3(1)(c)(ii)
• Unquoted shares and securities other than equity - higher of cost and open-market price. Rule 3(1)(c)(iii)
• Immovable property outside India - higher of cost and the price certified by a valuer recognised in the country where the property is located. Rule 3(1)(d)
• Bank account - the sum of all deposits made from the date of opening to the valuation date. Rule 3(1)(e)
• Interest in a foreign firm, AOP or LLP - net assets allocated by capital ratio, with the residue per the agreement or the profit-sharing ratio. Rule 3(1)(f)
• Any other asset - higher of cost or amount invested, and the arm's-length open-market price. Rule 3(1)(g)
• Asset transferred before the valuation date - higher of cost and sale price; if transferred without or for inadequate consideration, higher of cost and FMV on the transfer date. Rule 3(2)

Currency conversion: Values in a currency designated by the Reserve Bank of India under the Foreign Exchange Management (Deposit) Regulations, 2016 convert directly into rupees at the RBI reference rate on 31 March 2026. Other currencies are first converted into US dollars at the rate specified by the central bank of the country where the asset is located or by any other bank regulated in that country if the central bank specifies none and that dollar value is then converted at the RBI reference rate.

How is a foreign bank account valued?

The value of a foreign bank account under FAST-DS 2026 is the sum of all deposits made into it from the date of opening until 31 March 2026. It is not the closing balance.

Two exclusions apply. Deposits funded out of an earlier withdrawal from the same account are not counted again. And where the account was declared under Chapter VI of the Black Money Act, 2015 and charged to tax and penalty, only deposits made since that declaration are aggregated.

 

The 20% variance shelter under Rule 5(2)

Where the value declared in Form 1 differs from the value later determined by an income-tax authority, a variance not exceeding 20% of the declared fair market value will not, by itself, render the declaration invalid or void for misrepresentation, suppression of facts or false particulars.

E. Taxpayers Who Should Examine Their Position Immediately

The following taxpayers should consider examining their eligibility under the Scheme without delay:

A few common scenarios:

• Persons who have foreign bank accounts that were not disclosed in their income-tax returns;
• Persons holding foreign shares, securities, or other investments that were omitted from the FA Schedule;
• Persons who acquired foreign immovable property during a period of non-residency but failed to disclose it after becoming resident;
• Persons who inherited foreign assets but subsequently failed to disclose them;
• Persons who earned foreign income but did not properly disclose it in India;
• Persons whose source of foreign assets or income requires regularisation;
• Persons who have received notices or inquiries under the Black Money Act but whose assessment has not yet been completed; and
• Persons who have inadvertently omitted foreign assets from their income-tax returns despite the underlying source of investment having been duly accounted for.

It may also be relevant to mention that recently, the CBDT has enabled the display of information relating to foreign assets and income, received by it under the Automatic Exchange of Information (AEOI) framework, in the Annual Information Statement (AIS) of taxpayers on the Income Tax Portal. Assessees can accordingly access these details and verify whether there is any foreign asset/income appearing in the AIS that has not been reported and make appropriate disclosure and also take benefit of this Scheme.

It may also be relevant to mention that the foreign assets and income information reflected in AIS represents only such information as has been received by the Income-tax Department from partner jurisdictions under the aforesaid AEOI arrangements, and may not constitute a complete or exhaustive record of a taxpayer’s foreign assets and income.

F. The Filing Procedure

Step 1

File Form 1: The declaration is filed electronically in Form 1, along with supporting documents evidencing acquisition of the asset (or the income), and a valuation report where applicable. Multiple assets or income items can be declared within a single Form 1.

Step 2

Receive Form 2: The tax authority reviews the declaration and issues an order in Form 2 specifying the amount payable, within one month from the end of the month of filing.

Step 3

Pay within 2 months: Payment is due within two months from the end of the month the Form 2 order is received.

Step 4

Grace period, if needed: A further two months is available if payment is delayed, but with simple interest at 1% per month (or part month) of delay. The absolute outer limit is four months from the end of the month of the Form 2 order, miss this, and the Scheme benefit is lost entirely for that declaration.

Step 5

File Form 3: Once payment is made, an intimation with proof of payment is filed electronically in Form 3.

Step 6

Receive Form 4: The authority verifies Form 3 against the Form 2 order and issues a certificate of payment in Form 4, within one month.

G. What You Gain - Immunity and Effect

A valid declaration, backed by payment, brings meaningful protection:

• Immunity from any further tax or penalty, and from prosecution, under the Black Money Act, 2015, in respect of the declared income or asset
• The declared income or investment is kept out of "total income" under both the Income-tax Act, 1961 and the Black Money Act, 2015
• Where assessment proceedings are already pending for the relevant year, the Assessing Officer must factor the declaration into the final assessment order

One important caveat: the Scheme is not a route to reopen the past. A declarant cannot use it to claim rectification or revision of an assessment already completed, or seek relief in a pending appeal or reference relating to that assessment.

H. Where the scheme does not apply

• Income or assets that represent proceeds of crime where proceedings are pending under the Prevention of Money-Laundering Act, 2002
• Income or assets relating to an assessment year for which assessment has already been completed under the Black Money Act, 2015

FAST-DS 2026 may offer a valuable opportunity to bring past foreign asset reporting gaps into compliance but determining eligibility, valuation and the correct disclosure route requires careful assessment.

 

Reach out to us at info@akmglobal.com to review your foreign asset disclosure position, assess eligibility under FAST-DS 2026, and navigate the disclosure and compliance process before the 31 December 2026 deadline.