Starting 16 August, Indian taxpayers can regularise certain undisclosed foreign assets and income through a new scheme, with options for substantial penalties and amnesty, in a bid to crackdown on black money and ensure compliance.
India’s government will open a one-time route from 16 August for small taxpayers to regularise certain undeclared foreign assets and foreign income, in a move that follows the Union Budget 2026-27 and is now being put into effect by the Central Board of Direct Taxes. The disclosure window will stay open until 31 December 2026 and is designed to give eligible taxpayers a limited chance to clear up past omissions without facing the full weight of the black money rules.
The scheme has two tracks. Under the first, taxpayers with undisclosed foreign assets or income worth up to ₹1 crore will pay tax of 30 per cent plus an extra levy equal to that tax, taking the effective outgo to 60 per cent. The second covers certain foreign assets worth up to ₹5 crore that were either bought from income already taxed in India or acquired while the taxpayer was non-resident, but were not reported in the relevant return; those cases will attract a flat fee of ₹1 lakh. According to the CBDT, the scheme applies to undisclosed assets outside India, including financial interests in foreign entities, as well as foreign income that should have been taxed in India but was not declared.
The authorities have also set out how those assets will be valued. The relevant date is 31 March 2026, with fair market value generally defined as the higher of the acquisition cost and the amount the asset would fetch in the open market on that date. Separate valuation rules apply to foreign bank accounts, jewellery, property and listed or unlisted securities. For overseas bank accounts, the value is usually based on deposits made from the date the account was opened to the valuation date, subject to exclusions intended to stop the same money being counted twice if it is withdrawn and redeposited or used to buy another asset.
Taxpayers will have to file electronically in Form 1, with the entire process handled online by the income-tax department’s systems wing. The scheme is open to residents, certain non-residents and resident but not ordinarily resident taxpayers, provided the conditions are met. The department will issue an order in Form 2 within a month of electronic verification, and payment will then be due within two months after the end of the month in which that order is received. A further extension of up to two months is possible, but simple interest of 1 per cent a month, or part of a month, will apply. Once a valid declaration is made and paid, taxpayers get immunity from further tax, penalty and prosecution under the Black Money Act for the income or asset declared. Business Standard and Mint reported that the scheme does not cover proceeds of crime under the Prevention of Money-laundering Act or cases already completed under the Black Money Act.
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.
