Government rolls out foreign asset disclosure scheme for small taxpayers
A new voluntary disclosure scheme was rolled out allowing small taxpayers to declare previously undisclosed foreign assets or foreign income at a concessional combined levy of 30% tax plus an equal additional amount, totalling 60% of the declared value
The scheme is aimed at taxpayers with comparatively modest undisclosed foreign holdings, offering a lower-cost settlement route than the standard penalty regime under existing law
Eligible declarants receive immunity from prosecution and the higher statutory penalty that would otherwise apply for non-disclosure
The scheme was notified by the Central Board of Direct Taxes (CBDT) as a one-time window for regularising legacy non-compliance in foreign asset reporting
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
The Black Money Act, 2015 is the standalone statute governing undisclosed foreign income and assets held by Indian residents, distinct from the general Income-tax Act, 1961. It was enacted to specifically target offshore non-compliance following India's push for global automatic exchange of financial information.
Key Details
- Enacted in 2015; applies to "assessees" who are Residents and Ordinarily Resident (ROR) in India, since only RORs must report global income and assets
- Under the standard regime, undisclosed foreign income/assets attract tax at 30% of value, plus a penalty of three times the tax (i.e., 90%), taking the total exposure to 120% of the value of the undisclosed asset or income
- Section 43 separately provides a flat penalty (commonly cited at Rs 10 lakh) for mere failure to disclose a foreign asset in the income tax return, even where the asset was acquired from disclosed, tax-paid income — though exemptions exist for small-value foreign bank balances
- The Act also carries criminal prosecution provisions (rigorous imprisonment) for wilful evasion, separate from the monetary penalty
The new disclosure scheme offers a 60% settlement in place of the Act's standard 120% liability, effectively halving the cost of regularisation for eligible small taxpayers while still requiring the underlying 30% tax to be paid.
Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS)
FAST-DS is a one-time amnesty-style scheme introduced through the Finance Bill 2026 and notified by the CBDT, allowing eligible resident taxpayers, NRIs, and RNORs to regularise undisclosed foreign assets or income at reduced cost.
Key Details
- Eligibility is capped by an asset-value threshold — small taxpayers with aggregate undisclosed foreign assets up to a specified limit (reported at around Rs 1 crore, valued as on 31 March 2026) qualify for the scheme
- The levy is structured as 30% tax on the declared value plus an additional amount equal to the tax (30%), totalling 60% of the value of the undisclosed asset or income
- Successful declarants receive immunity from penalty and prosecution under both the Black Money Act, 2015 and the Income-tax Act, 1961 for the declared items
- The scheme is a one-time window rather than a permanent compliance mechanism, similar in design intent to earlier compliance windows offered after the Black Money Act's enactment in 2015
This is the specific scheme being rolled out, distinguishing it from the routine annual foreign-asset reporting obligation that continues to apply to all resident taxpayers going forward.
Schedule FA Reporting and Automatic Exchange of Information (CRS/FATCA)
Independent of any disclosure scheme, every resident-and-ordinarily-resident taxpayer holding foreign assets, accounts, or income is statutorily required to report them in Schedule FA of the Income Tax Return, regardless of whether their total income is taxable.
Key Details
- Schedule FA requires disclosure of foreign bank accounts, custodial accounts, equity/debt interests, insurance contracts, immovable property, trusts, and signing authority over foreign accounts
- India receives automated foreign account data from over 100 jurisdictions through the Common Reporting Standard (CRS) and from the United States through the Foreign Account Tax Compliance Act (FATCA)
- The CBDT cross-matches this CRS/FATCA data against filed returns via the Annual Information Statement (AIS), and has run SMS/email "nudge" campaigns to prompt correction of mismatches
- Failure to disclose attracts the Section 43 penalty under the Black Money Act even where the underlying income was legitimately taxed, making the compliance requirement procedural as much as substantive
The rise of CRS/FATCA-driven data matching is the underlying enforcement pressure that has made a concessional one-time disclosure route attractive to taxpayers who under-reported foreign holdings in the past, since automatic information exchange increasingly surfaces these gaps independent of voluntary disclosure.
- Levy under the new scheme: 30% tax + 30% additional amount = 60% of declared undisclosed foreign asset/income value
- Standard liability under the Black Money Act, 2015 without the scheme: 30% tax + 300% penalty (3x tax) = 120% of value
- Black Money Act, 2015 applies only to Residents and Ordinarily Resident (ROR) taxpayers
- Section 43 flat penalty for non-disclosure of a foreign asset in ITR: commonly cited at Rs 10 lakh per year
- India receives automatic financial account data from 100+ countries under the CRS framework, plus FATCA data from the United States