Payment must be made within two months from the end of the month in which the order is received.
The Income Tax Department has notified a one-time voluntary disclosure scheme allowing small taxpayers to declare certain undisclosed foreign assets and income by paying an effective 60% tax. The Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS) will come into effect on August 16, with declarations open until December 31, 2026.
What exactly is this scheme?
The Foreign Assets of Small Taxpayers-Disclosure Scheme is a one-time offer built into the Finance Act, 2026, the CBDT said in its FAQ. The idea is that if you have a foreign bank account, property or income abroad that you never told the tax department about, you can now declare it and pay up.
Under the scheme, taxpayers can disclose undisclosed foreign assets or income worth up to ₹1 crore by paying 30% tax plus an additional amount equal to the tax, taking the effective levy to 60%. A separate category covers foreign assets worth up to ₹5 crore that were acquired from already-taxed income or while the taxpayer was a non-resident but were not reported in tax-return schedules. Such declarations attract a flat ₹1 lakh fee, according to the CBDT.
Assets must be valued as on March 31, 2026, the designated valuation date. Declarations are processed by the Principal Director General or Director General of Income-tax (Systems), entirely online.
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Eligibility under FAST-DS Scheme
An eligible “assessee” includes a person residing in India in the relevant previous year, as well as a non-resident or a person who is resident but not ordinarily resident (RNOR), provided they were based in India either in the year the undisclosed income relates to or the year the undisclosed asset was acquired, the CBDT said.
A declaration can be made where the taxpayer failed to furnish a return, failed to disclose the asset or income in a return already filed or where the asset or income has escaped assessment under Section 147 of the Income-tax Act, 1961, according to the CBDT.
Categories of declaration
An FAQ list released by CBDT stated two categories of declaration. The first covers an undisclosed foreign asset or undisclosed foreign income that was not previously offered to tax, where the aggregate value must not exceed Rs 1 crore. The second covers a foreign asset that was already offered to tax, or was acquired when the taxpayer was a non-resident, but was not declared in the relevant schedule of the return; this category carries a threshold of Rs 5 crore. A taxpayer is not eligible to use the scheme if the value of assets under the second category exceeds Rs 5 crore, the CBDT clarified.
Tax payable
Under the first category, the amount payable is 30% tax on the value of the undisclosed asset or income, plus an additional amount equal to that tax, this takes an effective levy of 60%.
The CBDT illustrated this with an example: for an undisclosed foreign bank account valued at Rs 60 lakh and undisclosed foreign income of Rs 20 lakh, the tax works out to Rs 24 lakh, with an additional Rs 24 lakh payable, taking the total to Rs 48 lakh.
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Under the second category, a flat fee of Rs 1 lakh applies, irrespective of the asset’s value, as long as it remains within the Rs 5 crore threshold, the CBDT said.
Valuation of assets
Fair market value is generally the higher of the cost of acquisition or the open-market price on the valuation date, supported by a recognised valuer’s report where available. Where such valuation is not carried out, the indexed cost of acquisition is treated as the fair market value, the CBDT said.
For foreign bank accounts, the value is the sum of all deposits made into the account since it was opened, excluding deposits already declared under the Black Money Act, 2015 and deposits made from withdrawals of the same account, to avoid double counting. A variance of up to 20% between the declared value and the value later determined by the assessing officer will not, by itself, invalidate a declaration for assets other than bank accounts, the CBDT said.
Filing process
Declarations are to be filed electronically in Form 1, along with documents evidencing acquisition of the asset or income and a valuation report where applicable. The income-tax authority then communicates the amount payable through an order in Form 2, within one month from the end of the month in which the declaration is made.
Payment must be made within two months from the end of the month in which the order is received. A further period of up to two months is allowed, with simple interest of 1% for every month or part of a month of delay, the CBDT said. Payment is reported in Form 3, following which the authority issues a certifying order in Form 4 within one month of receiving the intimation.
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Immunity and exclusions
A valid declaration provides immunity from further tax, penalty and prosecution under the Black Money Act, 2015, in respect of the income or asset declared. The declared amount will also not be included in the taxpayer’s total income under the Income-tax Act, 1961 or the Black Money Act, the CBDT said.
The scheme does not apply to income or assets that represent proceeds of crime under proceedings pending under the Prevention of Money-laundering Act, 2002, or to assessment years for which Black Money Act proceedings have already been completed, the CBDT stated in its FAQs.
This article was first uploaded on August fifteen, twenty twenty-six, at thirty-seven minutes past four in the afternoon.
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