The Central Board of Direct Taxes (CBDT) has introduced a new scheme aimed at providing a one-time opportunity for taxpayers to disclose any foreign bank accounts, properties, investments, or income that may have been overlooked in previous income-tax returns. This initiative is known as the Foreign Assets of Small Taxpayers–Disclosure Scheme (FAST-DS), 2026, which officially commenced on August 16, 2026.

Taxpayers will have until December 31, 2026, to file their declarations using an online process. The CBDT has also released detailed FAQs to assist taxpayers and stakeholders in understanding the scheme and its provisions. The announcement was made via social media, indicating the government’s commitment to transparent tax practices.

The Income Tax Department has stated that the FAQs are intended to clarify the rules and assist affected individuals in navigating the disclosure process effectively.

Eligibility Criteria for FAST-DS

The FAST-DS scheme accommodates a diverse group of taxpayers, including residents, non-residents, and those classified as resident but not ordinarily resident (RNOR), provided they meet the specified conditions. A taxpayer is eligible to declare undisclosed foreign assets if they were a resident of India during the relevant financial year or when the foreign asset was obtained.

This scheme is applicable in cases where no income-tax return was filed, circumstances where the return was filed but excluded foreign assets or income, or instances where income or assets were omitted from assessment processes. Taxpayers are required to submit their declarations electronically, using Form 1, during the designated filing window from August 16 to December 31, 2026.

The disclosures can pertain to previous financial years, subject to the monetary thresholds outlined within the scheme, thus facilitating compliance for those who may be unaware of their disclosure obligations.

Tax Obligations Under the Scheme

Under FAST-DS, there is a critical distinction between undisclosed foreign income that was never reported for tax and foreign assets that, while reported, were not included in the appropriate schedules. For the first category, where foreign income or assets have not previously been subjected to tax, taxpayers must disclose assets valued up to Rs 1 crore. A tax of 30 per cent will be imposed, along with an additional charge equivalent to 100 per cent of the tax, leading to a total effective payment of 60 per cent of the declared amount.

Conversely, for individuals who have reported the income related to a foreign asset but neglected to declare the asset itself, the scheme allows an aggregate value of declared assets up to Rs 5 crore, with a flat fee of Rs 1 lakh payable. If the total exceeds Rs 5 crore, eligibility for this particular category is forfeited, emphasising the importance of accurate reporting.

Taxpayers must also be aware of the correct method for valuing their foreign assets, which varies according to the type of asset, and this valuation must ultimately be reported in Indian rupees. Form 1 must be submitted electronically alongside supporting documentation, ensuring a thorough approach to compliance.

Consequences of Disclosure and Important Considerations

Once a valid declaration is submitted and the requisite payment is completed, taxpayers will receive immunity from additional tax liabilities, penalties, and prosecution under the Black Money Act, 2015, concerning the declared income or assets. However, certain exemptions apply, particularly in cases involving criminal proceedings under legislation such as the Prevention of Money-laundering Act.

For taxpayers wanting to take advantage of this one-time opportunity, it is crucial to ascertain which of the two categories within FAST-DS is applicable. This entails understanding whether the foreign assets or income were ever subject to tax, alongside the respective monetary limits and payment obligations associated with each category. The deadline for declarations spans from August 16 to December 31, 2026.

In light of these provisions, taxpayers are urged to review their obligations carefully to ensure compliance and avoid potential repercussions in the future.

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