The government occasionally allows residents holding money or property in a foreign country but never declared it to come forward. The latest is the Foreign Assets of Small Taxpayers Disclosure Scheme, announced on 14th August and to be implemented from 16th August, and I can tell you this one's really designed for the little guy – not the big guy tax cheat. If you inherited a small foreign bank account, forgot to report on the foreign shares you purchased years ago when you were working abroad, or simply owned a flat you didn't mention on your return, then this scheme is well worth spending 15 minutes on.
I can't count how many clients have approached me fretful about the fact that they had opened a foreign bank account years back but are now unable to locate it because they became residents, and did not realize that they were supposed to report on the foreign assets acquired during their residency. The Black Money Act, 2015 already has provisions for the undisclosed foreign assets, but the repercussions are quite harsh – heavy penalties and criminal prosecution for serious, wilful concealment. There was a need for a fair way to take a single, honest mistake. The gap is filled by FAST-DS. The period is from 16th August to 31st December 2026 and after that date, it's that – it's that.The dates are from August 16th to December 31st, 2026 and there's no extension, there is no late filing.
The scheme applies to residents, and also to non-residents or RNORs who were residents in India in either of the two following years: the year in which the undisclosed income arose, the year in which the asset was acquired. So, even if you have since moved overseas, it is not necessary to be excluded as long as your residential status for the relevant year was not overseas, not now.
If you never filed a return, or if you did file a return but forgot to include the foreign asset or income, or if the department could reopen your return under Section 147, then you will be asked to declare. That is, it is not just for those who never filed, but also for those who filed but forgot to include the scheme.
Here is where people should really take note, as it has two routes to take, depending on what they are declaring.
Track one pertains to undisclosed foreign income or an undisclosed asset which was not offered for tax in the first place. In this, the net worth of asset plus income is not more than ₹1 crore on the valuation date 31st March, 2026. If you do qualify, you are taxed on the value at 30%, and then with a 30% penalty, also on the value in essence, 60% of the value. If you have a foreign bank account with ₹60 lakh and other undisclosed income of ₹20 lakh, then the taxable income will be ₹24 lakh and the additional 100% will bring the total taxable income to ₹48 lakh. It may seem high, but when you consider what the Black Money Act would take a hit on that asset – the cost of penalties and prosecution risk – it can be much more than that.
Track two is less severe, not to mention the one I think most small taxpayers will actually use. It's used where the asset was already included in tax, or where the asset was purchased during your time as a non-resident, and you just forgot to include it in the foreign asset schedule of your return. In this case the ceiling is of Rs 5 crore and the fee is Rs 1 lakh, irrespective of the worth of your asset – Rs 10 lakh or Rs 4.9 crore. I'd recommend any client with an undeclared, but tax-paid foreign property or mutual fund investment to use this window without hesitation, and it's a very reasonable price.
The trick is: if you have more than one of the same item in the same track their value is added together. I can see how people got that picture confused, someone who has a foreign mutual fund of ₹4.5 crore and the separately acquired shares, may think that they get an equal amount each, but once the total amount reaches above ₹5 crore, you are out of the running altogether, not simply capped.
The reason behind the rules remains the same, no matter the asset category, be it bullion, art, shares (quoted and unquoted), immovable property or partnership: The fair market value of an asset is the higher of the actual cost of acquisition or the open market value on the valuation date, or indexed cost where no formal valuation was made. Foreign bank accounts are treated a little more sympathetically – it is the sum of all funds deposited in the bank account since the opening of the account, excluding legitimate amounts deducted by the 2015 Act and amounts that were round-trip withdrawn.
There is also some tolerance there, too: If, when you declare, the valuation is not the same as an Assessing Officer says, then a 20% variance will not make your declaration invalid. Sensible cushion, as valuing an old foreign asset exactly is really difficult, particularly when there is not any easy access to a local valuer.
If the filing is correct, then the payment is on time, and the immunity is real—a non-tax and no penalty, no prosecution under the Black Money Act on the declared item, and no additional income under the Black Money Act or under the Income-tax Act on the declared item. Don't feel that you've lost the ability to challenge your assessment when it's decided past income; it's a new strategy, not a revival of old disputes.
Don't be late with it till November. It takes a long time to assemble documents for an asset that was purchased 15 years ago, including evidence of acquisition, bank statements and valuation reports, and the payment process begins after the submission of the declaration, with a maximum period of four months, including interest. If you have a small foreign holding that you don't know what to do with, it is time to get your paperwork ready and consult with a FEMA and cross-border disclosure expert right away. This window is very large but is also unforgiving of procrastination.