India has introduced a one-time, online disclosure scheme for small taxpayers to declare previously undeclared foreign assets and income, offering a pathway to compliance before the end-of-year deadline amidst evolving international tax transparency efforts.
India has opened a one-time window for small taxpayers to come clean on undeclared foreign assets and overseas income, offering a route to regularise old omissions before the year-end deadline. The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 came into force on 16 August 2026 and will close on 31 December 2026, with no declarations accepted after that date.
The scheme is a voluntary disclosure measure created under the Finance Act, 2026. It allows eligible taxpayers to report undisclosed foreign assets, undisclosed foreign income, or foreign assets that were not properly disclosed in their tax return, in return for a specified tax or fee. According to tax officials cited by Zee Business, the process is entirely online, and the valuation date for assets is 31 March 2026.
Eligibility is broader than it may first appear. Resident Indians may apply, while certain non-residents and resident but not ordinarily resident taxpayers can also qualify if they were residents in the year the income arose or when the asset was acquired. LiveMint reported that the Income Tax Department has also launched a Foreign Assets Information report on the e-filing portal, designed to help taxpayers check overseas financial data received from foreign jurisdictions before filing returns or using the disclosure scheme.
The cost depends on the type and value of the disclosure. For combined undisclosed foreign assets and income up to Rs 1 crore, the tax department says applicants must pay 30% of the declared value plus an amount equal to the tax due. For example, Zee Business said a foreign bank account worth Rs 60 lakh and undisclosed foreign income of Rs 20 lakh would trigger a total payment of Rs 48 lakh. For another category, taxpayers may disclose foreign assets worth up to Rs 5 crore by paying a flat fee of Rs 1 lakh, but anything above that ceiling is excluded. Declarations must be filed in Form 1 with supporting documents and valuation reports where needed, after which the tax authority issues an order in Form 2. Payment is due within two months of that order, with a further two-month extension available at 1% simple interest a month.
The scheme is aimed at small and genuine cases, including inadvertent omissions and reporting gaps, according to tax advisers quoted by ClearTax and other tax publications. It does not cover proceeds of crime where action has already been started or is pending under the Prevention of Money Laundering Act, 2002. Sources also say taxpayers who comply may receive immunity from further tax, penalty and prosecution under the Black Money Act, although the relief is limited to the scheme’s conditions and thresholds.
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