India opens tax amnesty scheme for small taxpayers to declare select foreign assets
The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 came into force on 16 August 2026 and will remain open for declarations until 31 December 2026
The scheme allows taxpayers to declare previously undisclosed foreign assets and foreign income, aimed particularly at small taxpayers such as students and non-resident Indians who inadvertently missed reporting requirements
Undisclosed foreign assets or income up to an aggregate value of ₹1 crore (as on 31 March 2026) can be regularised on payment of a defined tax-plus-charge
Foreign assets worth up to ₹5 crore that were acquired from already-taxed income (or during a period of non-residence) but omitted from the relevant schedule of past returns can be regularised for a flat fee
Declarations must be filed electronically in a prescribed form; on determination of the payable amount by the tax authority, the declarant gets a window to pay without interest
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
This is the principal statute under which failure to disclose foreign assets/income is currently penalised, and it is the legal backdrop against which the new small-taxpayer scheme provides relief. The Act received presidential assent on 26 May 2015 and came into force from 1 July 2015, applying to all persons "resident and ordinarily resident" in India under the Income Tax Act.
Key Details
- Undisclosed foreign income and assets are taxed at a flat rate of 30%, with an additional penalty of up to 90% of the undisclosed income — taking the combined tax-plus-penalty exposure to as much as 120%
- Separately, non-filing of returns or furnishing inaccurate particulars for foreign income/assets can attract a flat penalty of ₹10 lakh
- On enactment, the Act offered a one-time three-month compliance window (July-September 2015) with a reduced 30%+100% penalty (effectively 60%) and immunity from criminal prosecution for those who disclosed voluntarily
The 2026 scheme mirrors the logic of the 2015 compliance window — a defined, time-bound opportunity to disclose — but is narrower in scope, targeted specifically at small taxpayers with modest (up to ₹1 crore) or already-taxed-but-unreported (up to ₹5 crore) foreign holdings, rather than a general amnesty.
Automatic Exchange of Information — CRS and FATCA
The practical enforcement backdrop for these disclosure requirements is the international automatic exchange of financial account information, which has made it increasingly difficult for foreign assets to stay undetected by Indian tax authorities.
Key Details
- The Common Reporting Standard (CRS), developed by the OECD/G20, is a global automatic exchange of information (AEOI) framework; India was an early adopter, committing to exchange information from 2017
- The US-specific equivalent is FATCA (Foreign Account Tax Compliance Act), under which foreign financial institutions report accounts held by US persons
- India has activated AEOI relationships to send and receive account-holder information (name, account balance, income) with numerous partner jurisdictions
Data received through CRS/FATCA channels is what typically surfaces previously undisclosed foreign accounts and assets held by Indian residents, making disclosure schemes like this one a way for inadvertent non-compliant taxpayers to regularise their position before enforcement action follows from such data-matching.
Comparison with Earlier Voluntary Disclosure Schemes
India has periodically used amnesty-style disclosure windows since independence, though their design (discount rates, scope, and legal characterisation) has varied considerably.
Key Details
- The Voluntary Disclosure of Income Scheme (VDIS), 1997 ran from 18 June to 31 December 1997, drew over 350,000 declarants, and raised approximately ₹78 billion, at prevailing (discounted) tax rates
- The Income Declaration Scheme (IDS), 2016 ran from 1 June to 30 September 2016 and required a flat 30% tax plus a 25% surcharge on that tax plus a 10% penalty, for an effective rate exceeding 45%; the government explicitly stated IDS 2016 was not an "amnesty" scheme
- Between 1951 and 1997, roughly ten different disclosure/amnesty schemes were floated by various governments to bring undisclosed income into the formal tax net
Unlike VDIS 1997 or IDS 2016 (both general domestic-income disclosure windows), the 2026 scheme is narrowly scoped to foreign assets/income of small taxpayers, reflecting the current administrative focus on foreign-asset compliance enabled by CRS/FATCA data rather than a broad black-money amnesty.
- Scheme name: Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026
- Effective date: 16 August 2026; declaration deadline: 31 December 2026
- Ceiling for the ₹1-crore category: 30% tax plus an equal additional amount (effectively 60% levy)
- Ceiling for the already-taxed/omitted-schedule category: assets up to ₹5 crore, flat fee of ₹1 lakh
- Black Money Act 2015 standard penalty exposure: up to 120% (30% tax + 90% penalty) of undisclosed value
- VDIS 1997: over 350,000 declarants, approximately ₹78 billion raised
- IDS 2016 effective disclosure rate: over 45% (30% tax + 25% surcharge + 10% penalty)