India’s Income Tax Department has introduced a time-limited scheme enabling small taxpayers to regularise unreported foreign assets and income, aiming to boost compliance and reduce disputes before stricter enforcement begins.
India’s Income Tax Department has opened a time-limited route for small taxpayers to come clean on previously undisclosed overseas assets and foreign income, in a move aimed at reducing disputes while tightening compliance. The new Foreign Assets of Small Taxpayers-Disclosure Scheme, 2026, notified by the Central Board of Direct Taxes, began on August 16 and will close on December 31, 2026. According to Organiser, the scheme is meant to give eligible taxpayers a final chance to regularise omissions before the tax authorities pursue more serious action.
The government has framed the measure as a targeted relief for people whose failures to report foreign holdings may have been inadvertent rather than deliberate. Budget 2026 had already signalled the policy shift, with Finance Minister Nirmala Sitharaman announcing a one-time disclosure window for smaller cases such as students, young professionals, technology workers and returning or relocated non-resident Indians, according to Livemint and the Financial Express.
Under the scheme, taxpayers can disclose undisclosed foreign assets, foreign income and certain overseas holdings that should have been reported under tax rules. Organiser said the structure is tiered, with different treatment depending on the type of default and the value involved. For some cases, the liability can amount to an effective 60 per cent, while another category carries a ₹1 lakh fee, subject to conditions laid down in the rules.
The disclosure process is not automatic. Eligible taxpayers must file Form 1 online, after which the department will examine the declaration and issue Form 2 within a month setting out the amount payable. The Income Tax Department has also published an FAQ to explain eligibility, payment and the consequences of making a valid declaration. Once accepted, a compliant filing can provide immunity from further tax, penalty and prosecution under the Black Money Act for the matter disclosed, according to Organiser.
The scheme is not a blanket amnesty. It excludes proceeds of crime covered under the Prevention of Money Laundering Act and does not apply where assessment proceedings under the Black Money Act have already been completed. At the same time, the department has been broadening access to foreign-asset data through its e-filing portal. Livemint reported that taxpayers can now review a Foreign Assets Information report, check data received from foreign jurisdictions and submit feedback if details appear wrong, with updates flowing into the Annual Information Statement. Taken together, the measures point to a harder line on offshore compliance, even as the government offers a narrow window for smaller taxpayers to regularise past mistakes.
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