Summary: The Foreign Assets of Small Taxpayers–Disclosure Scheme Rules, 2026, notified vide G.S.R. 732(E) dated 14 August 2026, came into force on 16 August 2026, with 31 December 2026 prescribed as the “last date”. The Foreign Assets of Small Taxpayer Disclosure Scheme (FAST-DS), 2026 provides a one-time opportunity under Chapter IV of the Finance Act, 2026 (Sections 130–144) to regularise specified undisclosed foreign assets, undisclosed foreign income and certain foreign assets omitted from returns. Under Track A, where aggregate eligible undisclosed foreign assets and income do not exceed ₹1 crore, the prescribed payment comprises 30% tax plus an additional amount equal to 100% of that tax. Track B covers specified foreign assets up to ₹5 crore acquired from income while non-resident or from income already offered to tax but omitted from the relevant return schedule, with a ₹1 lakh fee. Rule 3 prescribes asset-specific valuation mechanisms as on 31 March 2026, including currency conversion rules. Rules 5–8 establish a four-form electronic process involving declaration, determination, payment and final certification, while Rule 5(2) provides specified protection for valuation variance up to 20%. The supplied material states that the scheme’s immunity is limited and does not automatically settle FEMA exposure.
The Foreign Assets of Small Taxpayers–Disclosure Scheme Rules, 2026, were notified vide G.S.R. 732(E) dated 14 August 2026 and came into force on 16 August 2026 [Rule 1]. The Rules define 31 December 2026 as the “last date” [Rule 2(4)].
The Foreign Assets of Small Taxpayers–Disclosure Scheme (FAST-DS), 2026, introduced under Chapter IV of the Finance Act, 2026 (Sections 130–144), provides a one-time opportunity to regularise specified undisclosed foreign assets, undisclosed foreign income and certain foreign assets omitted from the return.
The scheme is particularly relevant to returning NRIs, MNC employees holding foreign ESOPs/RSUs, overseas bank-account holders and professionals with cross-border assets or income.
Importantly, the scheme is taxpayer-specific; companies, LLPs, firms and trusts cannot themselves use FAST-DS for their employees.
Two Tracks — Two Completely Different Outcomes
The central eligibility and payment framework is contained in the Table to Section 133, with the valuation and payment mechanics supplemented by Rules 3 and 4.
Track A — Undisclosed Foreign Asset or Income
Where the aggregate value of eligible undisclosed foreign assets and undisclosed foreign income does not exceed ₹1 crore, the amount payable comprises:
- tax at 30% of the relevant value; and
- an additional amount equal to 100% of that tax.
The effective outflow is therefore 60%.
For example, Rule 4 illustrates a foreign bank account valued at ₹60 lakh plus undisclosed foreign income of ₹20 lakh. The aggregate ₹80 lakh falls within the ₹1 crore threshold. Tax is ₹24 lakh and the additional amount is another ₹24 lakh — total ₹48 lakh.
Track B — Foreign Asset Reporting Lapse
A separate category covers foreign assets:
1. acquired from income accruing outside India while the taxpayer was non-resident, but not subsequently reported after becoming resident; or
2. acquired from income already offered to tax under the Income-tax Act, 1961, but omitted from the relevant return schedule.
Here the aggregate asset value must not exceed ₹5 crore, and the prescribed payment is a ₹1 lakh fee.
Rule 4 specifically illustrates a foreign property worth ₹3 crore acquired while the taxpayer was non-resident: the case falls within the ₹5 crore category and the amount payable is ₹1 lakh.
This distinction is the heart of FAST-DS: the same foreign asset can potentially represent either a substantial 60% exposure or a ₹1 lakh compliance solution, depending upon its source and tax/reporting history.
Valuation: Rule 3 Is Critical
The Rules define 31 March 2026 as the valuation date [Rule 2(1)(e)].
However, valuation is not simply based on a taxpayer-selected market rate. Rule 3 prescribes asset-specific mechanisms.
- bullion, jewellery and precious stones — Rule 3(1)(a);
- artistic works — Rule 3(1)(b);
- quoted shares and securities — Rule 3(1)(c)(i);
- unquoted equity shares — Rule 3(1)(c)(ii);
- other unquoted shares/securities — Rule 3(1)(c)(iii);
- immovable property — Rule 3(1)(d);
- foreign bank accounts — Rule 3(1)(e);
- partnership/AOP/LLP interests — Rule 3(1)(f); and
- other assets — Rule 3(1)(g).
For bank accounts, the Rule generally looks at the sum of deposits from opening of the account to 31 March 2026, with specific treatment for redeposits arising from withdrawals.
Rule 3(2) and 3(3) also deal with assets transferred before the valuation date and assets acquired from proceeds of another asset or withdrawal from a bank account.
Where valuation is not carried out in specified circumstances, the Rules provide that indexed cost of acquisition can be deemed to be the fair market value.
Currency Conversion
This is another important correction to many simplified explanations of the scheme.
Under Rule 3(4), where the asset is denominated in a permitted currency, conversion into Indian currency is made using the RBI reference rate on the valuation date.
For other currencies, Rule 3(5) provides a two-stage conversion through USD using the prescribed foreign-country rate and the RBI reference rate.
The Four-Form Compliance Chain
FAST-DS is not merely a declaration followed by payment. Rules 5–8 create a four-stage electronic process.
Form 1 — Declaration [Rule 5]
Form 1 separately captures the ₹1 crore Track A computation and the ₹5 crore Track B computation.
Its annexure requires detailed information for bank accounts, immovable property, jewellery, artistic work, quoted/unquoted securities, other assets and foreign income.
Form 2 — Order [Rule 6]
The designated income-tax authority issues Form 2, determining the amount payable.
Under Rule 2(3), the income-tax authority for the scheme is the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be.
Form 3 — Payment Intimation [Rule 7]
After receiving Form 2, the declarant makes payment electronically and furnishes Form 3 with proof of payment.
The initial payment period is two months from the end of the month of receipt of Form 2.
For delayed payment, 1% interest per month or part thereof applies, subject to the additional period prescribed under Section 135(3). Form 3 also expressly recognises that part payments can be made.
Form 4 — Final Certification [Rule 8]
After payment, the authority issues Form 4, certifying the validity of the declaration and payment.
Form 4 records that the declaration is valid for purposes of Section 139 and provides the prescribed immunity, subject to Sections 130–144.
Valuation Accuracy and the 20% Protection
An important practical safeguard appears in Rule 5(2).
Where the fair market value declared in Form 1 differs from the value subsequently determined by the Assessing Officer or another income-tax authority during assessment or inquiry, the declaration is not treated as invalid merely because of that variance, provided the variance does not exceed 20% of the fair market value declared, subject to the statutory conditions.
Immunity Is Limited — FEMA Is Not Automatically Settled
FAST-DS should not be marketed as a universal “clean slate”.
The statutory framework provides immunity in respect of the matters covered by the scheme, including the prescribed protection under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Tax regularisation and exchange-control regularisation are separate exercises.
Conclusion: FAST-DS Rewards Documentation, Not Just Disclosure
FAST-DS 2026 is best viewed as a limited statutory opportunity for correcting foreign-asset compliance, rather than a generic amnesty.
The practitioner’s essential checklist is:
Section 133 → eligibility and thresholds
Rule 3 → valuation
Form 1 / Rule 5 → declaration
Form 2 / Rule 6 → determination
Form 3 / Rule 7 → payment
Form 4 / Rule 8 → final certification and immunity
For corporates and HR teams, the priority should be to identify potentially affected employees well before 31 December 2026, reconstruct their foreign-asset history and distinguish a genuine undisclosed-asset case from a mere reporting lapse.
The difference can be enormous: 60% effective payment versus ₹1 lakh fee.
And one final practitioner warning: FAST-DS may regularise the specified tax/BMA exposure, but it should not be assumed to cure FEMA or other independent regulatory exposure.
******
This article is based on Chapter IV (Sections 130–144) of the Finance Act, 2026 and the Foreign Assets of Small Taxpayers–Disclosure Scheme Rules, 2026 notified vide G.S.R. 732(E) dated 14 August 2026. It is intended as a general practitioner note and not as advice on any specific taxpayer’s facts.
The author is a Chartered Accountant based in Ahmedabad, advising individuals and corporates on cross-border tax, foreign asset reporting, and Black Money Act and FEMA compliance matters. This article reflects a general reading of the notified scheme and FAQs as on the date of writing and does not constitute advice on any specific case; readers should evaluate their own facts with a qualified professional before acting
