India’s Foreign Assets of Small Taxpayers Disclosure Scheme 2026 provides a rare opportunity for taxpayers to declare undisclosed foreign holdings with substantial penalties, as authorities step up efforts to uncover hidden offshore wealth.
India has opened a one-time window for taxpayers to come clean on certain overseas holdings and income, with the Foreign Assets of Small Taxpayers Disclosure Scheme 2026 taking effect on 16 August. Business Today reported that the measure is aimed at people who were resident in India in the relevant previous year, while some non-residents and resident but not ordinarily resident taxpayers may also qualify if they were resident when the foreign income arose or when the asset was acquired.
The scheme is designed to cover a range of lapses, including cases where no return was filed, where foreign assets or income were omitted from an already filed return, or where such sums escaped assessment. According to Business Today, declarations can be made for any earlier year, but only within the prescribed thresholds and other conditions.
The disclosure rules split cases into two buckets. Under the first, taxpayers can regularise undisclosed foreign assets or foreign income that was never offered to tax, as long as the combined value does not exceed ₹1 crore. Under the second, taxpayers can disclose foreign assets that were already taxed, or bought while they were non-resident, but not reported in the relevant return schedule; that category is capped at ₹5 crore, according to the report and commentary from tax advisers.
The cost of disclosure is steep in the first category. Business Today said the payable amount works out to 60% of the declared value, made up of tax plus an additional levy of 30% of the asset or income value. In the second category, the charge is a flat ₹1 lakh, provided the total value stays within the ₹5 crore limit. A valid declaration, followed by payment, brings immunity from further tax, penalty and prosecution under the Black Money Act, according to the scheme details cited by Business Today and tax platforms analysing the new rules.
Valuation is set with a reference date of 31 March 2026. For most assets, fair market value will be taken as the higher of acquisition cost and what the asset would fetch in the open market on that date. Business Today said different rules apply to bank accounts, shares, securities, jewellery and overseas property, with deposits into foreign bank accounts counted from the date the account was opened to the valuation date, but excluding transfers from the same account to avoid double counting.
Filings must be made electronically in Form 1 to the prescribed tax authority, with supporting records and, where relevant, valuation reports attached. Once the declaration is checked, the taxpayer receives the amount due in Form 2. Payment is generally due within two months of the end of the month in which the order is received, with an extra two months available at 1% simple interest a month for late payment, Business Today reported. The Income Tax Department’s new foreign assets information report on the e-filing portal may also help taxpayers verify overseas data before deciding whether to use the scheme or amend a return, LiveMint reported.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
