Income Tax Department rolls out foreign asset disclosure scheme for small taxpayers
The Income Tax Department rolled out the Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS), a one-time voluntary disclosure window for small taxpayers holding previously undisclosed foreign assets or income.
The scheme, announced in the 2026-27 Union Budget, came into effect from 16 August 2026, with online declarations permitted until 31 December 2026.
Eligible declarants pay an effective tax rate on the disclosed value of undisclosed foreign assets or income, subject to an aggregate value ceiling of ₹1 crore as on 31 March 2026, in exchange for immunity from further tax, penalty and prosecution.
The scheme operates alongside, and provides relief from prosecution under, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
This Act, which came into force in 2015-16, is India's dedicated legal framework to tax and penalise undisclosed foreign income and assets held by Indian residents, separate from the regular Income Tax Act, 1961. It provides for a flat tax rate on undisclosed foreign income/assets plus a penalty of up to three times the tax amount, along with criminal prosecution provisions carrying rigorous imprisonment, making non-compliance on foreign holdings significantly more punitive than domestic tax evasion.
Key Details
- Enacted: 2015; came into force 1 July 2015 (assessment year 2016-17 onward).
- Prescribes a flat 30% tax rate on undisclosed foreign income and assets, with an additional penalty (historically up to 3 times the tax, i.e., 90%) and possible prosecution with rigorous imprisonment.
- Applies specifically to foreign assets/income undisclosed to Indian tax authorities, distinct from the general Income Tax Act, 1961.
- The Act previously offered a one-time compliance window in 2015 for voluntary disclosure with reduced penalties.
FAST-DS 2026 grants immunity specifically from further tax, penalty and prosecution under this 2015 Act for the foreign assets/income declared, making the Black Money Act the direct legal backdrop against which this new scheme's relief provisions operate.
Voluntary Disclosure/Amnesty Schemes in Indian Tax Administration
Periodic voluntary disclosure or "amnesty" schemes allow taxpayers to regularise undisclosed income or assets by paying tax (often at a concessional or flat rate) in exchange for immunity from penalty and prosecution, as a compliance-boosting tool rather than a punitive one. Notable precedents include the Income Declaration Scheme, 2016 (for domestic undisclosed income) and the one-time compliance window under the Black Money Act, 2015 (for foreign assets), both aimed at widening the tax base without protracted litigation.
Key Details
- Income Declaration Scheme (IDS), 2016: allowed domestic undisclosed income disclosure at an effective 45% tax-plus-penalty rate.
- The Black Money Act's original 2015 compliance window ran for a limited period and required a flat declared-value-based tax plus penalty.
- FAST-DS 2026 is targeted specifically at "small taxpayers" (implying a lower monetary threshold group) rather than being a universal disclosure window.
FAST-DS follows this established pattern of time-bound, one-time disclosure windows, but is narrower in scope, restricted to small taxpayers with aggregate undisclosed foreign assets/income up to ₹1 crore as of 31 March 2026.
Automatic Exchange of Information and Foreign Asset Reporting
Global frameworks such as the OECD's Common Reporting Standard (CRS) and the India-US FATCA arrangement enable Indian tax authorities to automatically receive information on foreign bank accounts and assets held by Indian residents, which has driven increased detection of undisclosed foreign holdings and, consequently, government schemes to encourage voluntary compliance before enforcement action.
Key Details
- India is a signatory to the OECD Common Reporting Standard (CRS) for automatic exchange of financial account information.
- India also has a FATCA-related Inter-Governmental Agreement with the United States for exchange of account information.
- Schedule FA (Foreign Assets) in the Income Tax Return form is the mandatory disclosure mechanism for foreign assets/income, non-compliance with which attracts Black Money Act penalties.
Improved cross-border information exchange under CRS/FATCA increases the risk of undisclosed foreign assets being detected, which is part of the practical rationale for the government offering a limited compliance window like FAST-DS before enforcement-driven penalties apply.
- Scheme name: Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS).
- Announced in the 2026-27 Union Budget; effective from 16 August 2026.
- Declaration deadline: 31 December 2026.
- Eligibility ceiling: aggregate undisclosed foreign assets/income up to ₹1 crore as on 31 March 2026.
- Immunity granted from further tax, penalty and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
- Black Money Act, 2015 (general framework): flat 30% tax on undisclosed foreign income/assets, plus penalty up to 3 times the tax, with prosecution provisions.