Foreign Asset Disclosure Scheme 2026: From budget proposal to rollout

The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS, 2026) is a one-time voluntary disclosure scheme that allows eligible taxpayers to report certain undisclosed foreign assets, foreign income, or foreign assets by paying a specific tax or fee. It is mainly important for taxpayers with foreign bank accounts, investments, or other overseas assets that were not properly disclosed in their ITR.

This scheme came into force on 16th of August 2026, with the last date to file a declaration being 31st of December, 2026. Its main goal is to allow certain taxpayers, including NRIs, returning Indians, students, professionals, and others with financial connections outside India, to correct past reporting errors or missed foreign asset disclosures. Keep reading further to know more about the foreign asset disclosure scheme 2026.

What Was the Aim Behind Introducing the Foreign Asset Disclosure Scheme?

In India, various rules require certain taxpayers to report specified foreign assets and income. However, under the earlier tax framework, you could attract significant tax, penalties, and even prosecution (in some cases) for failing to report foreign assets or foreign-source income. For example, you may attract the following penalties under the Black Money Act:

• 30% tax on undisclosed foreign income and assets.
• Penalties that are higher than the tax itself.
• A penalty of up to Rs. 10 lakh in certain foreign-asset reporting cases.
• You may even face prosecution in some cases.

The existing rules may create issues for some small taxpayers who have made honest reporting mistakes. Hence, in Budget 2026, the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 was proposed and introduced. It serves as a one-time opportunity for certain taxpayers, including students, young professionals, returning NRIs, and technology employees.

However, before being introduced, the scheme went through several stages. That being said, let's understand the stages the scheme went through before becoming operational.

From Budget Announcement to the Final Scheme

Before the scheme became operational, it went through various stages. The table below lists these stages till the final commencement:

It's important that you stay aware of this timeline, as the scheme is time-limited. You will not be allowed to file a declaration after the 31st of December, 2026. Further, the scheme mainly covers two categories. So, let's now understand what is covered under the scheme.

What Does the Scheme Cover?

As discussed, the scheme offers eligible taxpayers an opportunity to disclose certain foreign income and assets by paying the prescribed tax or fee. It mainly covers two categories:

Category 1: Undisclosed Foreign Income or Assets

This category applies when you have undisclosed foreign income or an undisclosed foreign asset within the specific aggregate limit of Rs. 1 crore. So, under the scheme, the amount you need to pay is:

• 30% tax + an additional amount equal to 100% of the tax.

Hence, the total payment is usually equal to 60% of the relevant amount. However, this is subject to the valuation and other rules under the scheme.

Category 2: Technical Non-Reporting of Foreign Assets

Assume you may have paid tax on the income or acquired the assets under circumstances covered by the scheme, but you didn't report the foreign asset properly in the required ITR schedule. This category applies to such situations.

The scheme provides for a Rs. 1 lakh fee for qualifying cases up to the prescribed Rs. 5 crore limit. However, it is subject to the applicable conditions. You need to understand the differences between these categories.

Undisclosed income/assets involve a tax issue, while technical non-reporting may involve a reporting mistake even when you have paid tax on the underlying income. Now, what if your undisclosed foreign income or assets fall within the Rs. 1 crore limit? Let's learn that.

Undisclosed Foreign Income or Assets: Up to ₹1 Crore

Suppose you have undisclosed foreign income or an undisclosed foreign asset that falls within the Rs. 1 crore limit under the Scheme. In this case, you need to pay:

• 30% tax + 100% of that tax as an additional amount.

Confused? Let's understand this with an example: Assume that the relevant amount is Rs. 1 crore. So,

• Tax at 30% = Rs. 30 lakh
• Additional amount equal to 100% of tax =Rs. 30 lakh
• Total under the scheme = Rs. 60 lakh

Under the Black Money Act, the penalty could be much higher in the example. But here comes an important point. Do not simply assume that the foreign asset's original price will always be the amount used for the scheme.

For example, For assets covered by the scheme, March 31, 2026 is the prescribed valuation date. The fair market value is then determined using the valuation method applicable to the particular asset under the FAST-DS Rules. Also, to determine the asset's value, the prescribed valuation rules are considered. Hence, the actual amount you need to pay will depend on the valuation method that applies to your particular asset.

Now comes the second situation: technical non-reporting of foreign assets of up to Rs. 5 crore. Let's understand this in detail.

Technical Non-Reporting of Foreign Assets: Up to ₹5 Crore

Category 2 covers specified foreign assets where the source of acquisition falls within the conditions prescribed by the Scheme for example, certain assets acquired from foreign income while the taxpayer was non-resident or from income already offered to tax in India but the asset was not reported in the relevant ITR schedule. It's not confusing; let's understand this with an example.

For example:

• You were a non-resident when you acquired the foreign asset using income earned outside India. However, you failed to report it after becoming a resident, or
• You acquired the foreign asset from income you have already reported and taxed in India. However, you failed to disclose the foreign asset in the required ITR schedule.

You may incur a Rs. 1 lakh fee if the qualifying foreign asset falls within the prescribed limit of Rs. 5 crore. However, this is subject to the scheme's conditions. You must be thinking why this even matters. Here's why.

It's not necessary that the problem occurred because you avoided tax. Instead, the problem may simply occur because you did not report the foreign asset correctly. So, when you determine which rules apply, this distinction can make a major difference.

Further, let's discuss the Rs. 20 lakh threshold.

What is the Rs. 20 lakh Threshold?

The ₹20 lakh threshold is separate from the FAST-DS monetary limits. It relates to certain penalty and prosecution provisions under the Black Money Act. The 2026 amendments provide relief for certain undisclosed foreign assets other than immovable property where the prescribed aggregate value does not exceed ₹20 lakh, subject to the statutory conditions. Foreign immovable property is not covered by this particular ₹20 lakh relaxation.

Therefore, taxpayers should not treat ₹20 lakh as a general FAST-DS eligibility limit. The FAST-DS categories have separate ₹1 crore and ₹5 crore limits.

Can an NRI Use the Foreign Asset Disclosure Scheme?

Yes, an NRI can use the foreign asset disclosure scheme. A person's status as an NRI does not automatically disqualify them from using the scheme. The main factor here is determining your exact residential status for the specific tax year in question.

Under the framework, anyone who is currently classified as a non-resident or who qualifies as a resident but not ordinarily resident (RNOR) is allowed to submit a declaration under certain conditions.

It applies if the individual maintained a resident status in India during the relevant prior year linked to the unreported foreign income or the acquisition of the foreign asset. To make understanding this easier, let's consider an example:

What Should Taxpayers With Foreign Income Or Assets Do?

If you have resided or worked abroad, it's advised to review all your foreign income and assets, including:

• ESOPs and RSUs
• Foreign real estate
• Insurance policies
• Foreign mutual funds
• Shares and securities
• Foreign bank accounts
• Foreign brokerage accounts
• Foreign investment accounts
• Ownership or interest in foreign companies
• Other foreign financial assets
• Income generated from these assets.

Ensure you review all these things to ensure accurate valuation and prevent several legal or financial mismatches. Additionally, there are a few other points you must check before you make a declaration. Further, let's discuss these points.

What Should You Check Before Making a Declaration?

After understanding the threshold and reviewing the assets and income, you come to the main part: making a declaration. It's the most important decision under the scheme. Before you file for a declaration, it's crucial to review the complete history of the foreign asset or income. To do the same, you must check the following points:

• Fund Origin: Identify the source from which the income or investment money comes.
• Acquisition Date: Determine when you purchased or received the foreign asset.
• Residential Status: Verify your tax residency during the relevant year.
• Tax History: Confirm whether the underlying income has previously been taxed.
• Reporting History: Check whether the foreign asset was disclosed in the relevant ITR schedule.
• Asset Valuation: Apply the value to be used under the scheme's rules
• Relevant Assessment Years: Specify the exact tax years involved.
• Scheme Eligibility: Check whether the particular asset or income actually qualifies.

A valid declaration, followed by the required payment and compliance with the Scheme, provides specified immunity from further tax, penalty and prosecution under the Black Money Act in respect of the income or asset covered by the declaration, subject to the Scheme's conditions.

Nevertheless, filing a declaration may have important consequences. For example, rules may limit your ability to later fix or update details about your reported income or asset.

So, before you declare, understand what you are declaring and what it means. Also, don't declare just because you think it is cheaper than the potential penalty.

Since we have been discussing only where the scheme applies, don't assume it applies to every situation. There are situations in which the scheme might not apply; we will discuss them next.

When Can the Scheme Not Apply?

While we have focused on the program's scope, it's important to note that it is not applicable in every situation. For example, the scheme excludes any income or assets that directly or indirectly originate from criminal activities. Specifically, The Scheme does not apply to specified cases involving proceeds of crime and other circumstances excluded under the Scheme, including certain situations involving proceedings under specified laws.

Furthermore, The Scheme does not apply in certain situations specified by law, including specified cases where assessment proceedings under the Black Money Act have already reached finality, as well as cases involving certain prosecution or proceeds-of-crime circumstances. Hence, individuals must carefully review their situation before assuming they are eligible.

Moving further, let's understand why you should review your foreign assets as an NRI.

Why Should NRIs Review Their Foreign Assets Now?

There might be many NRIs whose foreign assets were acquired years ago. For example, you may have:

• Purchased U.S. stocks
• Received ESOPs and RSUs
• Purchased a property outside India
• Created a foreign retirement account
• Received an overseas inheritance
• Opened a foreign bank account while working abroad
• Invested through a foreign brokerage account.

It's possible that your asset may be completely legitimate. However, the issue may occur if you fail to disclose a change in your Indian residential status.

According to the source material, the Indian tax authorities will receive your foreign information via international information-sharing systems. Later, this information may be matched against Indian tax records. Hence, it's wise to review your foreign assets rather than receive a notice or query from the tax department. Further, let's discuss what to do if you did not properly report foreign assets or income.

Steps to Take for Undisclosed Foreign Income and Assets

Follow the steps if you have foreign assets or income that may not have been reported properly:

Step 1: List Your Foreign Assets

Draft a complete list of your:

• Property
• Securities
• Insurance
• Bank accounts
• Investments
• Retirement accounts
• Business interests

Step 2: Check the Source

Determine the source of the money for each asset. Check whether it came from:

• Salary
• Gift
• Inheritance
• Business income
• Investment income
• Income earned while you were an NRI

Step 3: Check Your Residential Status

Determine your residential status for the year in which:

• You received the income, or
• You acquired the asset

Step 4: Review Your Previous ITRs

Check if you have reported all the required details related to foreign income or foreign assets correctly.

Step 5: Determine the Type of Issue

Identify whether you have:

• Unreported foreign income
• Unreported foreign asset
• A technical reporting mistake
• An issue covered by the Rs. 20 lakh threshold
• No reporting requirement at all

Step 6: Check Scheme Eligibility

Once you consider all the above-mentioned factors, then only you must determine whether you qualify to use the foreign asset disclosure scheme.

Step 7: Understand the Cost and Consequences

Consider the amount payable under the scheme and the consequences under the normal law and compare them. Additionally, after you make the declaration, you may receive some rights and protections; ensure you understand what these are.

Lastly, let's discuss some considerations related to the Foreign Asset Disclosure Scheme 2026 for NRIs.

The Bigger Lesson for NRIs

Apart from just being a tax-saving opportunity, there's much more to the foreign assets of small taxpayers disclosure scheme 2026. The scheme reminds every taxpayer that reporting foreign assets is also an important part of complying with the Indian tax system.

You may have acquired an overseas asset legally with fully taxed income. However, it doesn't automatically mean that you don't need to report it in an Indian tax return. This specific requirement is particularly important for NRIs and returning Indians, as their residential status can change over time.

Suppose you have an account or investment that was not relevant to Indian reporting while you were a non-resident. However, once you transition to Indian residency, it may become relevant. So, these are a few points that might not feel like such a big deal but may have a big impact.

Therefore, instead of asking yourself Do I have a foreign asset? " ask, " When did I acquire the asset? "Where did the money arise from, what was my residential status, and did I report it properly.

To Conclude

The foreign asset disclosure scheme 2026 offers a one-time opportunity for eligible taxpayers to address certain issues that involve unreported foreign income, assets, or technical reporting failures. Before you file for a declaration under the scheme, ensure you review the fund source, acquisition year, asset value, residential status, and various other factors.

Don't keep waiting to receive a tax notice; if you have old foreign bank accounts, investments, property, etc., that you did not properly report, review them carefully. Also, if you are not confident about the process or need help, contact an expert at Savetaxs.

At Savetaxs, we have a team of experts who can help you review your foreign assets, understand reporting requirements, verify your eligibility under the scheme, and ensure compliance with everything. Connect with us right away, as we are actively working 24/7 across all time zones.