New Scheme Lets Small Taxpayers Declare Foreign Assets, Pay 60% Levy

The Income Tax Department has notified a voluntary disclosure scheme for small taxpayers holding undisclosed foreign assets or income. The scheme, named the Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS), allows eligible individuals to come clean by paying an effective tax of 60% on the declared value, without facing additional penalties or prosecution.

Announced in the 2026-27 Union Budget, the scheme comes into effect from Sunday, August 16, 2026. Online declarations will remain open until December 31, 2026, according to the Central Board of Direct Taxes (CBDT), which issued the notification on Saturday, August 15, 2026.

The scheme targets taxpayers such as students, young professionals, technology employees, and relocated non-resident Indians who may have inadvertently failed to disclose eligible foreign assets or income in their tax returns.

Under the scheme, a taxpayer must pay a 30% tax on the value of the undisclosed foreign asset or income, plus an additional amount equal to the tax, making the total liability 60% of the declared value. The fair market value of the assets will be determined as of March 31, 2026, the CBDT said.

FAST-DS provides for two categories of declarations. In the first category, for undisclosed foreign assets or income that were not previously offered to tax, the aggregate value must not exceed ₹1 crore. The second category covers foreign assets that were already offered to tax, or were acquired when the taxpayer was a non-resident but were not reported in the relevant schedule of the tax return. For this category, the threshold is ₹5 crore, with a ₹1 lakh fee payable.

To illustrate the tax liability, the CBDT's frequently asked questions give an example: where an undisclosed foreign bank account is valued at ₹60 lakh and undisclosed foreign income amounts to ₹20 lakh, the total tax payable would be ₹48 lakh.

Taxpayers who make valid declarations will receive immunity from further tax, penalty, and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, in respect of the assets or income disclosed. Additionally, the declared income or the amount invested in the disclosed asset will not be included in the taxpayer's total income under the Income-tax Act, 1961, or the Black Money Act.

The scheme is designed to encourage voluntary compliance among small taxpayers while providing a one-time opportunity to regularise their foreign holdings. The government has emphasised that the scheme is not a general amnesty, but a targeted measure for those with modest overseas assets.

Tax experts have noted that the 60% effective levy is steep, but the immunity from prosecution may be attractive to those who fear action under the stringent Black Money Act. The online platform for declarations is expected to be made available on the income tax department's e-filing portal.