The budget has proposed a one-time six-month window for voluntary disclosure of foreign income and assets. It is particularly beneficial for those who have received employee stock ownership plans (ESOPs) from foreign employers and have not disclosed them in their income tax returns (ITR).
The scheme operates within defined value thresholds: undisclosed foreign assets or income must not exceed 1 crore. Certain reporting omissions involving assets acquired during non-resident status are permitted up to Rs 5 crore on payment of a fixed fee.
How much to pay
The scheme covers both undisclosed foreign income and undisclosed foreign assets. Undisclosed foreign income refers to income earned from a source outside India that should have been taxed in India but was not reported in the ITR.
Undisclosed foreign assets include any asset located outside India that is held in the taxpayer’s name or as a beneficial owner, where the source of investment cannot be satisfactorily explained. This will include overseas bank accounts, shares, ESOPs, mutual fund holdings, insurance policies, trusts, or other financial interests that were never disclosed in Indian tax filings.
If undisclosed foreign income or assets up to Rs 1 crore are declared, tax is payable at 30% of the value of the asset or undisclosed income (as on March 31, 2026) , plus an additional amount equal to 100% of such tax. The effective outflow will be 60%.
Amit Maheshwari, managing partner, AKM Global, a tax and consulting firm, says in cases involving foreign assets up to Rs 5 crore that were acquired from already taxed income or during a period of non-resident status but were not reported, there’s a one-time fee of Rs 1 lakh. “The scheme will operate only within the notified time window by the government, and declarations must be made within that notified period,” he says.
Immunity has been provided from levy of further tax, penalty and from prosecution under the Black Money Act 2015 and any income or asset declared under the scheme would not affect the finality of completed assessments.
How to file
The taxpayer will have to file a declaration of undisclosed foreign asset or foreign income. The income tax department will issue an order with the amount payable within one month. The taxpayer will have to pay the amount within two months and intimate the department regarding the payment details in a prescribed form. The department will issue an order certifying the payment.
Sandeepp Jhunjhunwala, partner, Nangia Global, says the only exceptions are assets or income from proceeds of crime, proceedings initiated/ pending under Prevention of Money Laundering Act, and those related to the assessment year for which assessment proceedings are completed under Black Money Act. “For cases where a taxpayer has received a notice in the recent months for not disclosing any foreign assets, subject to the qualifying threshold criteria, he can participate in the scheme,” he adds.
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