Forgot to report foreign assets? This new tax window lets small taxpayers fix it for Rs 1 lakh

The Income Tax Department has opened a one-time window for small taxpayers to disclose certain foreign assets that were not reported in their tax returns, with eligible taxpayers allowed to regularise them for a flat Rs 1 lakh.

The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS) came into force on August 16 and will remain open until December 31. It was announced in the Union Budget 2026-27 to provide relief to taxpayers who may have missed reporting overseas assets or income in their tax returns.

However, the Rs 1 lakh option is not a blanket amnesty for every undeclared foreign asset. It applies only to a specific category of taxpayers whose foreign assets were acquired from income that had already been taxed in India, or in certain cases where the taxpayer was a non-resident at the time of earning the income but later failed to report the assets after becoming a resident.

The value of the foreign asset covered under this route must not exceed Rs 5 crore as of March 31.

Who can pay Rs 1 lakh?

Under FAST-DS, the Rs 1 lakh fee applies where a taxpayer holds a foreign asset that was either acquired from income already offered to tax under Indian law but not reported in the relevant return, or acquired from income earned outside India during a period when the taxpayer was a non-resident, but the asset was not disclosed after the taxpayer became a resident in India.

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The Finance Act sets a Rs 5 crore valuation ceiling for eligibility under this category.

This provision may be relevant for taxpayers holding overseas shares, bank accounts, insurance policies, or other foreign financial assets where the tax on the underlying income was already paid in India, but the separate reporting requirement for foreign assets was missed.

The government has indicated that the scheme is intended to address cases involving small taxpayers, including individuals with legacy foreign holdings or assets linked to past foreign employment.

What about foreign income?

A separate and more expensive route applies where a taxpayer has undisclosed foreign income or an undisclosed foreign asset whose source cannot be satisfactorily explained.

In such cases, the combined value of the undisclosed foreign income and assets must not exceed Rs 1 crore.

The taxpayer is required to pay tax at 30 per cent on the relevant value, along with an additional amount equal to 100 per cent of that tax. This effectively results in a total outgo of 60 per cent of the undisclosed amount.

This distinction is important because taxpayers cannot automatically opt for the Rs 1 lakh route merely because the value of the foreign asset is within Rs 5 crore. The tax treatment and source of funds must also satisfy the conditions of the appropriate category under FAST-DS.

Why is the scheme significant?

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 requires resident taxpayers to disclose foreign assets and foreign-source income in their tax returns.

Non-disclosure or incorrect reporting of foreign assets can attract penalties under the Act, including a penalty of Rs 10 lakh for failure to furnish information about overseas assets, subject to certain exceptions.

FAST-DS provides a separate compliance mechanism that allows eligible taxpayers to disclose specified foreign assets or income and obtain immunity under the scheme, subject to its conditions.

According to the government’s Budget FAQ, the scheme offers a one-time opportunity to disclose specified foreign assets and income that were either not taxed or not reported, in exchange for payment of the prescribed tax or fee, along with immunity from further tax, penalty, and prosecution under the Black Money Act, where applicable.

The Rs 1 lakh fee applies only once for the same asset

An important clarification under the scheme relates to assets that remained undisclosed for multiple years.

The government’s FAQ states that where the same asset was not disclosed in more than one year, the Rs 1 lakh fee is payable only once and is applied to the first year of non-disclosure. After that, the asset is treated as disclosed for subsequent years under the scheme.

However, if different assets were acquired in different years, the fee may apply separately for each relevant year of first non-disclosure.

This provision can significantly affect the total cost of regularisation depending on the taxpayer’s history of foreign holdings.

What is the deadline?

The FAST-DS window opened on August 16 and will close on December 31.

Declarations must be made electronically in the prescribed form and verified as per the procedure laid down under the scheme.

Once a declaration is verified, the income-tax authority is required to communicate the amount payable within one month from the end of the month in which the declaration is made.

The taxpayer must then make payment within two months from the end of the month in which the order is received. In certain cases, an additional extension of up to two months is allowed, with interest at 1 per cent per month or part thereof on the outstanding amount.

Check your foreign asset information in AIS

The timing of the scheme is notable as the tax department has recently begun displaying Foreign Asset Information received under CRS and FATCA in the Annual Information Statement (AIS) on the income tax e-filing portal.

The Central Board of Direct Taxes (CBDT) has said this facility is intended to help taxpayers view available information and correctly report foreign assets and foreign-source income in their returns. It has also clarified that AIS data is only a facilitative reference and may not represent a complete record of all foreign assets or income.

For taxpayers who may have missed reporting overseas accounts, shares, or other financial assets, reviewing AIS data can be an important first step before deciding whether to opt for FAST-DS.

What taxpayers should check

The key factor is whether the income used to acquire the foreign asset was already disclosed and taxed in India.

If it was, and the only lapse is non-reporting of the foreign asset, the Rs 1 lakh category may apply, provided the asset value is within the Rs 5 crore limit and other conditions are met.

If the underlying income was never taxed in India or the source of funds cannot be satisfactorily explained, the taxpayer may fall under the higher-cost category, which involves a 60 per cent total payment and a lower Rs 1 crore threshold.

The scheme is therefore a targeted compliance relief measure rather than a general waiver for all foreign-asset non-disclosures. Taxpayers with overseas holdings should carefully assess their residential status, source of funds, and past tax filings before making a declaration.

With the deadline set for December 31, FAST-DS provides a limited window for eligible taxpayers to review their past returns and foreign holdings and decide whether the one-time disclosure option is applicable.

(With inputs from agencies.)