August 18, 2026 | Taxation, Direct and IndirectFAST-DS 2026 provides a one-time opportunity for eligible taxpayers to address certain past omissions relating to foreign assets and foreign income. The scheme covers specific cases involving undisclosed assets, already-taxed income and assets acquired during periods of non-residence, with declarations required by 31 December 2026. This article explains the eligibility criteria, applicable payment, valuation rules, filing process and key considerations before making a declaration.
The Central Board of Direct Taxes (CBDT) has introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, commonly called FAST-DS. It gives eligible taxpayers one final opportunity to report certain foreign assets or foreign income that was not properly disclosed earlier.
The scheme started on 16 August 2026. Taxpayers must file their declaration by 31 December 2026. No declaration can be filed after this date.
Indian tax residents are required to disclose their foreign assets and foreign income in their income-tax returns. This information is generally reported in Schedule FA of the return.
In some cases, taxpayers may have failed to make the disclosure because:
They acquired the asset while they were living outside India.
The money used to acquire the asset had already been taxed in India.
They did not understand the requirement to report the asset.
They disclosed their income but accidentally omitted the related foreign asset.
They failed to file an income-tax return or did not correctly report the foreign income.
FAST-DS is intended to provide a limited and simplified opportunity to correct these specific reporting failures. It is not a general amnesty for black money or every type of undisclosed foreign asset.
The scheme may be used by an eligible person who is resident in India for the relevant year.
A person who is currently a non-resident or a Resident but Not Ordinarily Resident (RNOR) may also qualify if that person was resident in India either:
In the year to which the undisclosed foreign income relates; or
In the year in which the foreign asset was acquired.
Therefore, a person cannot be rejected merely because he or she is presently living outside India. The person’s residential status during the relevant year must also be examined.
FAST-DS broadly covers two different situations.
|
Category |
Situation |
Maximum limit |
Amount payable |
|
Category 1 |
Undisclosed foreign asset or foreign income that was not offered to tax |
INR 1 crore in aggregate |
60% of the declared value or income |
|
Category 2 |
Foreign asset acquired from already-taxed income or acquired while the person was a non-resident, but not reported in the return |
INR 5 crore in aggregate asset value |
Flat fee of INR 1 lakh |
This category applies where the taxpayer cannot properly explain the source of the foreign asset, or where foreign income taxable in India was not offered to tax.
The taxpayer must pay:
Tax at 30%; and
An additional amount equal to 100% of that tax.
The combined payment is effectively 60% of the value of the foreign asset or foreign income. The aggregate value must not exceed INR 1 crore.
For example, if a taxpayer declares:
A foreign bank account valued at INR 60 lakh; and
Undisclosed foreign income of INR 20 lakh,
the total amount payable would be:
Tax on INR 80 lakh at 30%: INR 24 lakh.
Additional amount equal to the tax: INR 24 lakh.
Total payable: INR 48 lakh.
This category is more favourable. It covers assets where:
The asset was acquired from income that had already been offered to tax in India; or
The asset was acquired when the taxpayer was a non-resident; and
The taxpayer failed to report the asset in the relevant income-tax return.
The aggregate value of the foreign assets must not exceed INR 5 crore as on 31 March 2026. The taxpayer must pay a flat fee of INR 1 lakh.
For instance, a person may have purchased foreign mutual funds using salary income that was already disclosed in India. If the person failed to report those mutual funds in Schedule FA, the person may fall under this category, subject to all other conditions.
The scheme covers a wide range of foreign assets, including:
Foreign bank accounts.
Foreign immovable property.
Foreign shares and securities.
Mutual funds.
Partnership or LLP interests.
Jewellery, bullion and precious stones.
Paintings, sculptures and other artistic works.
Other financial interests in foreign entities.
The value of all relevant assets must be considered together for applying the INR 1 crore or INR 5 crore limit. A taxpayer cannot avoid the threshold by treating each asset separately.
The valuation date under FAST-DS is 31 March 2026. Generally, the fair market value is the higher of:
The cost of acquisition; or
The price that the asset could reasonably fetch in the open market on that date.
For some assets, a valuation report from a recognised valuer may be required.
Special valuation rules apply to different assets:
Foreign property is generally valued using its cost or open-market value, whichever is higher.
Jewellery, bullion and artwork are valued using cost or market value, whichever is higher.
Quoted shares are valued using the prescribed market-price method.
Foreign bank accounts are generally valued by adding eligible deposits made into the account up to 31 March 2026.
Amounts transferred from the same account or already counted elsewhere may be excluded to prevent double counting.
All values must ultimately be reported in Indian rupees. Foreign currency must be converted using the prescribed exchange-rate method.
The declaration must be filed electronically in Form 1. A taxpayer may include more than one asset or income item in the same declaration.
Supporting documents should be maintained and uploaded where required. These may include:
Bank statements.
Purchase documents.
Tax records.
Proof of the source of funds.
Foreign investment statements.
Property documents.
Valuation reports.
Evidence showing the taxpayer’s residential status.
After Form 1 is submitted and verified, the tax authority will issue an electronic order in Form 2 stating the amount payable. This order is normally issued within one month from the end of the month in which the declaration was filed.
The taxpayer must generally pay the amount within two months from the end of the month in which the order is received. A further period of up to two months may be available, with simple interest at 1% for every month or part of a month of delay. Payment details must then be submitted in Form 3. After verification, a payment certificate is issued in Form 4.
If the declaration is valid and the required payment is made, the taxpayer receives important protection in relation to the declared asset or income.
The scheme provides immunity from:
Further tax or penalty under the Black Money Act for the declared item.
Prosecution under the Black Money Act for the declared item.
Inclusion of the declared investment or income in total income under the specified provisions.
However, this protection is available only for the assets and income properly covered by the declaration. It does not automatically protect the taxpayer from unrelated tax violations, FEMA issues, money-laundering proceedings or other legal liabilities.
FAST-DS should not be treated as a universal settlement scheme. It is not available in certain situations, including where:
The asset or income represents proceeds of crime and proceedings under the Prevention of Money-laundering Act, 2002, have been initiated or are pending.
Assessment proceedings under the Black Money Act have already been completed for the relevant year.
The foreign asset value exceeds INR 5 crore for Category 2.
The undisclosed asset or income exceeds INR 1 crore for Category 1.
The taxpayer does not satisfy the prescribed residential-status conditions.
The declaration is incomplete, inaccurate or unsupported by documents.
A taxpayer should also consider whether the asset creates separate obligations under FEMA, anti-money-laundering laws, exchange-control rules or the laws of the foreign country.
FAST-DS 2026 is a narrow but important compliance opportunity. A taxpayer with an overseas asset of up to INR 5 crore may be able to regularise a past reporting omission by paying a flat fee of INR 1 lakh, provided the asset was acquired from already-taxed income or during a period of non-residence. In more serious cases involving undisclosed foreign income or unexplained assets up to INR 1 crore, the effective payment may be 60%.
Taxpayers should not wait until the deadline. They should first examine the source of funds, residential status, valuation, past tax returns and all related legal issues. The scheme is available only until 31 December 2026, and professional tax advice should be obtained before filing because an incorrect declaration may not provide the expected protection.
India Law Offices can assist taxpayers in reviewing their foreign assets, checking residential status, tracing the source of funds and determining whether they qualify under FAST-DS 2026. Our team can also help with valuation, preparation of supporting documents, calculation of the applicable tax or fee, filing of the required forms and responding to any questions from the tax authorities. We provide practical legal and tax guidance so that taxpayers can use this one-time opportunity correctly and avoid future compliance issues.
Thank you for getting in touch! We appreciate you contacting us at India Law Offices. We will review the details that you have submitted and one of our experts will connect with you shortly.
Here are some of the other related articles authored by our experts which might be of interest to you.
