IT Department
New Delhi: The Income Tax Department has launched a one-time voluntary disclosure window to bring small taxpayers with previously undisclosed overseas assets and income into the tax net. Eligible taxpayers can avail themselves of immunity from further tax, penalty and prosecution under the Black Money Act, subject to fulfilment of the prescribed conditions.
The Foreign Assets of Small Taxpayers–Disclosure Scheme (FAST-DS), 2026, notified by the Central Board of Direct Taxes (CBDT), came into force on August 16 and will remain open only until December 31, 2026. The department has made it clear that no declaration will be accepted after the deadline.
The scheme, introduced under Chapter IV of the Finance Act, 2026, is being positioned as a limited opportunity for taxpayers who may have failed to disclose certain foreign assets or foreign income in their tax returns to make a clean disclosure and settle their liability.
The scheme is particularly aimed at smaller cases where overseas assets may have gone unreported because of inadvertence, lack of awareness or changes in an individual’s residential status.
The government has specifically identified categories such as students, young professionals, employees in the technology sector and non-resident Indians who subsequently relocated as among those who could potentially benefit from the disclosure mechanism.
The move comes against the backdrop of India’s increasingly stringent framework for reporting foreign assets and income. Under the existing tax architecture, failure to disclose foreign holdings can expose taxpayers to significant financial and legal consequences under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
FAST-DS therefore seeks to provide an exit route for eligible taxpayers before undisclosed assets become the subject of more serious tax proceedings.
What can be disclosed?
The scheme permits eligible taxpayers to voluntarily declare specified categories of:
The CBDT has prescribed different treatment depending on the nature of the undisclosed asset or income and whether the income had previously been offered to tax.
For cases involving undisclosed foreign assets or income that had never been offered to tax, the relevant aggregate value is subject to the prescribed threshold, including the ₹1 crore ceiling as of March 31, 2026 specified under the scheme.
The applicable liability can include an effective levy of 60 per cent, comprising 30 per cent tax and an additional amount equivalent to the tax, depending on the category into which the declaration falls.
For the other prescribed category, the scheme provides a higher threshold of Rs 5 crore and a flat fee of Rs 1 lakh, subject to the conditions laid down in the FAST-DS Rules, 2026.
The structure is designed to distinguish between different types of defaults rather than impose a uniform financial burden on every taxpayer approaching the disclosure window.
Taxpayers seeking to avail themselves of the scheme must submit Form 1 electronically between August 16 and December 31, 2026. Once the declaration is examined and verified, the authorities will issue Form 2 within one month, specifying the amount payable by the taxpayer.
The process is therefore not merely a self-declaration followed by automatic closure. Taxpayers will have to provide the requisite information and comply with the prescribed verification and payment requirements before the declaration can result in the benefits contemplated under the scheme.
The Income Tax Department has also released a comprehensive FAQ document explaining the scheme and the rules. The FAQ is intended to address common questions surrounding eligibility, disclosure, payment and the consequences of making a valid declaration.
The most consequential feature of FAST-DS is the legal finality it can provide to eligible taxpayers who make valid declarations and comply with the scheme.
A declaration that satisfies all the prescribed requirements can provide immunity from further tax, penalty and prosecution under the Black Money Act in respect of the disclosed matter. For taxpayers who have been carrying the risk of an old foreign-asset disclosure default, this could prove to be the most important incentive.
The government is effectively offering eligible taxpayers an opportunity to put previously undisclosed overseas holdings on record, pay the prescribed amount and obtain closure instead of allowing the matter to potentially escalate into prolonged tax and criminal proceedings.
FAST-DS is not restricted only to individuals who are currently resident in India. The scheme covers residents, non-residents and resident but not ordinarily resident (RNOR) taxpayers, subject to the eligibility conditions.
A key requirement is that the taxpayer must have been resident in India in the relevant year of income or at the time the foreign asset was acquired, as applicable under the scheme.
This provision could be particularly relevant for people whose residential status has changed over the years, including individuals who have moved abroad after working or studying in India or those who have returned to India after a period overseas.
Despite its broad appeal, FAST-DS is not a blanket amnesty for every undisclosed foreign asset. The scheme specifically excludes income or assets representing proceeds of crime covered under the Prevention of Money Laundering Act. It also does not apply in cases where assessment proceedings under the Black Money Act have already been completed.
In other words, the government has drawn a clear line between taxpayers who voluntarily come forward within the prescribed window and cases where the tax authorities have already completed the relevant proceedings.
The scheme is therefore best understood as a time-bound compliance opportunity, rather than a general waiver of consequences for undisclosed foreign wealth. The significance of the scheme goes beyond the immediate revenue that could be collected.
India has steadily strengthened mechanisms for identifying overseas financial interests through international information-sharing arrangements and reporting frameworks. Foreign bank accounts, securities, investments and other overseas holdings are increasingly visible to tax authorities through such channels.
For taxpayers, an asset that may once have remained outside the immediate visibility of Indian authorities can therefore carry a substantially greater compliance risk today.
FAST-DS gives smaller taxpayers an opportunity to address such omissions before they potentially turn into enforcement cases. At the same time, the scheme sends a clear message: voluntary compliance will be given a defined route to closure, but the window will not remain open indefinitely.
