Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS 2026)

Summary: The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS) provides a one-time, time-bound route for eligible taxpayers to declare specified foreign assets and foreign income omitted from earlier returns. The Scheme operates under Chapter IV of the Finance Act, 2026, comprising sections 130 to 144, together with the Foreign Assets of Small Taxpayers–Disclosure Scheme Rules, 2026. Form 1 may be filed electronically up to 31 December 2026. Section 133 creates two separate declaration routes: Row 1 covers undisclosed foreign assets or foreign income, subject to an aggregate ceiling of ₹1 crore and payment equal to 30% tax plus an amount equal to 100% of that tax, producing an effective burden of 60%; Row 2 covers specified foreign assets acquired from foreign income earned while non-resident or from income already offered to tax but omitted from Schedule FA, subject to a ₹5 crore ceiling and a flat ₹1 lakh fee. Rule 3 prescribes valuation as on 31 March 2026, including special rules for foreign bank accounts, sold assets, reinvestment and currency conversion. Rule 5 operationalises electronic filing and provides a 20% valuation-variance safeguard for assets other than bank accounts. The Scheme also prescribes Forms 2 to 4 for determination, payment intimation and certification. Full and timely payment is essential for immunity under the Black Money Act; false particulars, excluded cases, excess-value declarations and payment defaults may invalidate or bar relief.

1. What is this scheme, in one minute

India has opened a one-time, time-bound window — the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS) — for taxpayers to declare foreign assets and foreign income they never reported by 31^st December, 2026. The assessee can file Form 1 declaring the assets/income from 16^th August 2026 onwards but only up to 31^st December, 2026

In exchange for declaring and paying what the scheme asks, you get immunity: no further tax, no penalty, and no prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for what you declared.

The scheme is a discounted settlement, not a new tax. Its whole purpose is to let people come clean cheaply before the department’s automatic data (CRS/FATCA) catches up with them.

2. The legal framework

Three documents contain the entire law:

3. Who can declare (eligibility)

3.1 Residential status (section 131)

You are an eligible “assessee” if you are:

• A resident in India in the relevant previous year; or
• Currently non-resident or RNOR, provided you were resident in India either in the year the undisclosed foreign income arose, or in the year the foreign asset was acquired.

This covers the common NRI situation: a person who was resident when the default happened, but has since moved abroad, can still use the scheme.

3.2 Grounds for declaration (section 132)

A declaration can be made for any previous year where any one of these happened:

• You failed to file a return under section 139 of the Income-tax Act, 1961; or
• You filed a return but failed to disclose the foreign asset or income; or
• The asset/income escaped assessment under section 147.

3.3 Who is excluded (section 140)

The scheme does not apply to:

• Income or asset representing, directly or indirectly, proceeds of crime where proceedings are initiated/pending under the PMLA, 2002; and
• Any year for which assessment has already been completed under the Black Money Act, 2015.

Note: a pending Black Money Act assessment does not bar a declaration (section 141 instead tells the officer to consider the declaration).

4. Section 133 — “Amount payable by declarant” (the core)

This is the heart of the scheme. It is a two-row table. It is everything about “what do I need to pay?”.

Row 1 (Sl. No. 1) — Genuinely undisclosed money

What is declared:

• (a) an undisclosed asset located outside India; or
• (b) undisclosed foreign income

Amount payable (aggregate of):

1. Tax at 30% of the value of the undisclosed asset as on 31 March 2026; plus
2. Tax at 30% of the undisclosed foreign income; plus
3. An amount equal to 100% of the tax in (1) and (2) — i.e., a penalty equal to the tax.

Net effect: 30% tax + 100% penalty = 60% of the value.

Condition: The aggregate value of the undisclosed asset plus the undisclosed foreign income must not exceed ₹1 crore. If it exceeds ₹1 crore, you cannot enjoy the benefit of this scheme.

Row 2 (Sl. No. 2) — Clean money, just not reported

What is declared: an asset located outside India acquired from:

• (a) income that accrued/arose outside India while you were a non-resident, but not declared in Schedule FA after you became a resident; or
• (b) income that was already offered to tax under the Income-tax Act, 1961, but the asset was not declared in Schedule FA.

Amount payable: a flat fee of ₹1 lakh (no tax, no penalty).

Condition: The value of the asset must not exceed ₹5 crore.

5. Why pay tax even if I’m voluntarily declaring?

Because declaring doesn’t turn untaxed money into taxed money.

• Row 1 money is money that never paid tax. Admitting it voluntarily doesn’t erase the tax that was always due. So you pay the 30% tax you always owed, plus a 100% penalty. That penalty is the “deal.”
• Row 2 money is already clean, that’s precisely why there is no tax there, only a ₹1 lakh fee for the procedural lapse of missing Schedule FA.

Think of it as a discounted settlement, not a tax on honesty. The alternative is far worse:

6. Rule 5 — Declaration of asset/income located outside India

Rule 5 of the FADS Rules, 2026 is what actually operationalises the declaration. It says:

1. A declaration under section 133 must be made electronically in Form 1 to the income-tax authority (Pr. DGIT / DGIT (Systems)), subject to the two aggregate caps:
   • Undisclosed income + assets (Row 1) ≤ ₹1 crore; and
   • Undisclosed assets (Row 2) ≤ ₹5 crore.
2. The 20% valuation shield: if the fair market value of an asset (other than a bank account) you declared is later found by the Assessing Officer to differ, the declaration will not be invalid for misrepresentation as long as the variance is within 20% of what you declared.

The new form on the portal

The income-tax portal now carries Form No. 1 of FADS 2026:

“Declaration Under Rule 5 of the Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026 [Refer Chapter IV of Finance Act, 2026]”

The form is filed in compliance with Rule 5 of the FADS Rules 2026. It is filed electronically only (digital signature, or EVC where digital signature is not mandatory).

7. How assets are valued (Rule 3)

Valuation decides both eligibility and how much you pay. Every asset is valued at FMV as on 31 March 2026.

The general rule is: higher of cost of acquisition and open-market value on the valuation date , with one critical default: if you don’t obtain a market valuation, the indexed cost of acquisition is deemed to be the FMV.

The bank-account rule (most important, most misunderstood)

A foreign bank account is NOT valued at its closing balance. It is valued at the sum of all deposits from the date of opening to 31 March 2026, with two exclusions:

1. Deposits made out of withdrawals from the same account (re-deposits) — excluded to avoid double counting.
2. If the account was earlier declared under Chapter VI of the Black Money Act, 2015, only deposits since that declaration count.

Please note, for example, A dormant account with a ₹5,000 balance but ₹4 crore of historical deposits is a ₹4 crore asset under this rule.

Three cross-cutting rules

1. Assets sold before 31 March 2026 still count — valued at higher of cost and sale price (Rule 3(2)).
2. No double counting on reinvestment — where sale proceeds/bank withdrawals funded a new asset, the old asset’s value is reduced by the amount reinvested (Rule 3(3)).
3. Currency conversion — convert to INR at the RBI reference rate on 31 March 2026 (Rule 3(4)–(5)).

8. The limits — what “₹1 crore” and “₹5 crore” really mean

The limits are CEILINGS, not exemptions.

There is no amount small enough to skip. “Under ₹5 crore” does not mean “no need to report.” It means the opposite: you may use Row 2 only if your assets are worth ₹5 crore or less.

• ₹4 crore of clean-money assets: You are eligible for the scheme, pay ₹1 lakh.
• ₹5.1 crore of clean-money assets: You are not eligible at all. You will be assessed under Black Money Act directly.

Same for Row 1: ₹1 crore is a maximum, not a free threshold. Even a ₹10 lakh unreported foreign account must be declared and settled.

The ceilings are tested on the AGGREGATE, and there is no partial declaration.

• Row 1: add all undisclosed asset FMV + all undisclosed foreign income. If it crosses ₹1 crore, the entire declaration is barred — you cannot declare ₹1 crore and leave the rest out.

• Row 2: add all clean-money asset values. If it crosses ₹5 crore, the entire declaration is barred.

Please Note Row 1 and Row 2 are separate tests, separate ceilings, separate declarations. They’re independent. You can file one route even if you’re ineligible for the other.

9. What happens if your assets EXCEED the limit?

The scheme simply does not apply to you — and there is no partial option. You fall back on the regular law, which is harsh:

Under the Black Money Act, 2015:

• 30% tax on the asset/income (no deductions, no indexation)
• 300% penalty on that tax – total ~120% of value
• ₹10 lakh penalty per year for not reporting in Schedule FA
• Prosecution — 6 months to 7 years imprisonment (3–10 years for wilful evasion)
• No time limit — an asset bought decades ago is taxed the year it is discovered

And you’re not invisible. India receives your foreign account data automatically via CRS (100+ jurisdictions) and FATCA, and the CBDT’s “NUDGE” campaigns are actively matching that data against Schedule FA. Over 30,000 taxpayers have already disclosed with around ₹29,000 crore in response.

Bottom line: Exceeding the ceiling doesn’t remove your liability, it removes your discount. You still owe everything under the Black Money Act plus prosecution risk, and you’ve now knowingly passed up a statutory settlement window (which can look worse once an assessment begins).

10. The filing process: Form 1 → Form 4

The entire scheme runs electronically before a single authority — the Pr. DGIT / DGIT (Systems).

11. Payment timeline and interest

Once you file Form 1, the department replies with a Form 2 order telling you exactly how much to pay (tax + penalty, or the ₹1 lakh fee). The 31 December deadline is only for filing Form 1 it is not your payment deadline. Your payment clock starts only after you receive Form 2.

You get two months, interest-free, measured from the end of the month in which you receive the Form 2 order. Pay within this window and you owe nothing extra.

If you miss it, you get two grace months, but you’ll pay 1% simple interest per month (or part-month) on the unpaid amount, so 1% for the first grace month, 2% for the second.

That’s it! four months total (two free + two with interest) from the end of the order month. If you don’t pay everything within that outer limit, your declaration is treated as void and deemed never made, and any money already paid is not refunded.

12. What the immunity covers (and doesn’t)

Covered

• No further tax, penalty or prosecution under the Black Money Act for declared items, for PY 2025-26 and all earlier years
• Declared amounts not included in total income under the IT Act or Black Money Act
• Form 4 is conclusive. Its your immunity certificate
• Pending assessments must consider the declaration

Not covered

• Only what you declared — an account left out of Form 1 gets nothing.
• Only the Black Money Act — this is not a general amnesty from every statute.
• No reopening of settled matters (section 137).
• No refunds (section 138).
• Truth at every stage: false particulars void the declaration at any stage (section 134(3)).
• Future obligations: from FY 2026-27, the asset must appear in Schedule FA, and its income is taxable normally.

This guide is for general information only and is not legal or tax advice. Taxpayers should consult a qualified professional before making a declaration under the FAST-DS 2026.