The Central Government has notified the Foreign Assets of Small Taxpayers–Disclosure Scheme Rules, 2026 through G.S.R. 732(E), dated 14 August 2026, in exercise of the powers conferred by section 143 of the Finance Act, 2026. The Rules have been issued vide Notification No. 114/2026/F. No. 370142/18/2026-TPL and have come into force with effect from 16 August 2026. The Scheme forms part of Chapter IV, comprising sections 130 to 144 of the Finance Act, 2026.
The Foreign Assets of Small Taxpayers–Disclosure Scheme, 2026 (FAST-DS) is a one-time voluntary disclosure mechanism intended to enable eligible taxpayers to declare specified undisclosed foreign assets, undisclosed foreign income or foreign assets which, though acquired out of explained/taxed sources or during a period of non-residence, were not disclosed in the relevant schedules of the income-tax return. The accompanying FAQs issued on the Scheme explain its operation, eligibility conditions, valuation principles, payment requirements and legal consequences in a taxpayer-friendly manner.
The Rules specify 31 March 2026 as the valuation date for determining the fair market value of assets proposed to be declared. The prescribed last date for filing a declaration is 31 December 2026, and no declaration can be filed after that date. The prescribed income-tax authority for administration of the Scheme is the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, and the process is envisaged to be undertaken electronically.
The FAQs clarify that eligibility is not confined only to persons who are presently resident in India. An assessee who is resident in India in the relevant previous year may avail the Scheme. A person who is presently non-resident or Resident but Not Ordinarily Resident (RNOR) may also be eligible where such person was resident in India in the previous year to which the undisclosed foreign income relates or in the previous year in which the undisclosed foreign asset was acquired. The residential status for the relevant year is required to be appropriately reported in Form 1.
A declaration may, subject to the statutory conditions, be made where the assessee had failed to furnish the return of income, had furnished a return but failed to disclose the relevant foreign asset or income, or where such asset or income had escaped assessment. The FAQs further clarify that declarations may relate to any previous year, provided the income or asset falls within the categories specified in section 133 and satisfies the monetary limits and other conditions of the Scheme.
The Scheme broadly provides for two categories of disclosures. The first category covers an undisclosed asset located outside India and/or undisclosed foreign income that had not been offered to tax. For this category, the aggregate value of the undisclosed foreign asset as on 31 March 2026 together with the undisclosed foreign income should not exceed ₹1 crore. The second category covers specified foreign assets which were acquired from income earned while the assessee was a non-resident, or from income which had already been offered to tax in India, but which were not disclosed in the relevant foreign asset schedule of the return after the disclosure obligation arose. For this category, the aggregate value of the eligible foreign assets should not exceed ₹5 crore.
In respect of the first category under serial number 1 of the Table in section 133, the amount payable consists of tax at 30 per cent of the value of the undisclosed foreign asset or undisclosed foreign income, as applicable, together with an additional amount equal to 100 per cent of such tax. Thus, the aggregate outgo works out to 60 per cent of the amount/value declared under this category. The Rules illustrate that where a foreign bank account is valued at ₹60 lakh and undisclosed foreign income amounts to ₹20 lakh, the aggregate declaration is ₹80 lakh; tax at 30 per cent is ₹24 lakh and the additional amount equal to the tax is ₹24 lakh, resulting in a total amount payable of ₹48 lakh.
For the second category under serial number 2 of the Table in section 133, a flat fee of ₹1 lakh is payable where the aggregate value of the covered foreign assets does not exceed ₹5 crore. The Rules illustrate a case of a foreign plot valued at ₹3 crore, acquired from income earned abroad while the assessee was a non-resident and subsequently omitted from the relevant return schedule, as being eligible on payment of the ₹1 lakh fee. However, where the aggregate value of assets falling in this category exceeds ₹5 crore—for example ₹6.5 crore—the taxpayer is not eligible to make a declaration under this category.
The Rules prescribe detailed fair market value (FMV) provisions for different classes of foreign assets. As a broad principle, for assets such as bullion, jewellery, precious stones, artistic works, immovable property and specified other assets, the FMV is generally the higher of the cost of acquisition and the price that the asset would ordinarily fetch in the open market on the valuation date. A valuation report may be obtained from a valuer recognised by the Government, or an agency of the Government, of the country or specified territory concerned. Where the prescribed market valuation is not carried out, the indexed cost of acquisition is deemed to be the FMV, wherever so provided in Rule 3.
For quoted shares and securities, the FMV is the higher of cost of acquisition and the average of the lowest and highest quoted prices on an established securities market on the valuation date. Where there is no trading on that date, the corresponding average price on the immediately preceding trading date is taken. Unquoted equity shares are valued according to the prescribed net-asset-based formula, while unquoted shares or securities other than equity shares are generally valued with reference to the higher of their acquisition cost and open-market value, subject to the detailed provisions of Rule 3.
A specific valuation method has been prescribed for a foreign bank account. Its value is ordinarily the sum of deposits made into the account from the date of opening up to the valuation date. Where the bank account had earlier been declared under Chapter VI of the Black Money Act, 2015 and tax and penalty had been charged on the value so computed, deposits made after the earlier declaration are taken into account. Deposits representing re-deposit of amounts withdrawn from the same account are excluded so as to prevent double counting. The Rules and FAQs illustrate this methodology through examples resulting in values of US$4,900 in an ordinary case and US$3,100 where the earlier deposits had already been covered by a declaration under the Black Money Act, with such amounts thereafter being converted into rupees as on 31 March 2026.
In the case of an interest in a foreign partnership firm, association of persons or limited liability partnership, the net assets are first determined as on the valuation date. The portion corresponding to capital is allocated among partners or members in proportion to their capital contribution, while the residual net assets are allocated in accordance with the dissolution provisions of the governing agreement or, in the absence of such provisions, in the profit-sharing ratio. For residuary assets not covered by a specific valuation method, FMV is generally the higher of cost/amount invested and arm’s-length open-market value, subject to the indexed-cost rule where applicable.
The Rules also contain safeguards against double counting where one foreign asset is converted into another. Where consideration from transfer of an old asset, or withdrawal from a bank account, is invested in a new asset, the value of the old asset/bank account is reduced by the amount invested in the new asset, while the new asset is separately valued under the applicable valuation rule. For an asset other than a bank account which had been transferred before the valuation date, the Rules prescribe valuation with reference to the higher of cost and sale price; special treatment applies where the transfer was without consideration or for inadequate consideration.
All reportable values are to be expressed in Indian Rupees. Where the foreign currency is one of the permitted currencies designated by the Reserve Bank of India under the Foreign Exchange Management (Deposit) Regulations, 2016, conversion is to be made at the RBI reference rate on the valuation date. For other currencies, the amount is first converted into US Dollars at the rate specified by the concerned country’s central bank, or another regulated bank where necessary, and thereafter converted from US Dollars into Indian Rupees at the RBI reference rate on the valuation date.
The Scheme also provides a limited valuation protection. In respect of assets other than bank accounts, where the FMV declared in Form 1 differs from the value subsequently determined by the Assessing Officer or another income-tax authority, a variance not exceeding 20 per cent of the FMV declared will not, merely on account of that variance, make the declaration invalid or void on the ground of misrepresentation, suppression of facts or furnishing of false material particulars.
A declaration is required to be furnished electronically in Form 1. Form 1 captures the declarant’s basic particulars including name, address, PAN and, where applicable, passport particulars; the type and nature of asset/income, relevant previous year, residential status, evidence regarding acquisition of the asset or earning of income and the applicable valuation details. The prescribed Annexure separately provides for bank accounts, immovable property, jewellery, artistic works, quoted and unquoted shares and securities, other assets and foreign income. Multiple assets and income items may be included by repeating the relevant fields. Where the declarant claims non-resident status for any year covered by the declaration, passport details are required to be furnished.
Supporting records assume importance under the electronic filing framework. The FAQs clarify that the declarant is required to upload documents evidencing acquisition of the asset or earning of income and, wherever valuation is undertaken, the relevant valuation report—for example in the case of immovable property, jewellery, artistic works, unquoted shares and securities and other assets. Form 1 also contains a verification that the information furnished is correct and complete and that the provisions governing cases in which the Scheme is unavailable are not attracted.
After electronic verification of Form 1, the prescribed income-tax authority will communicate the amount payable through an electronic order in Form 2. The FAQs state that Form 2 is to be issued within one month from the end of the month in which the declaration is made. The amount specified in Form 2 is ordinarily required to be paid within two months from the end of the month in which the order is received.
Where the declarant is unable to make full payment within the initial two-month period, payment may be made during a further period not exceeding two months, subject to simple interest at one per cent for every month or part thereof of delay on the outstanding amount. The prescribed Form 3 expressly accommodates the initial amount paid, outstanding amount, delayed instalments and interest, and the Rules clarify that payments under the Scheme may be made in parts. Failure to make payment within the permissible outer period results in loss of the benefit of the Scheme for the declaration concerned.
20. After payment, the declarant is required to furnish an electronic intimation in Form 3, together with proof of payment and details of interest, if any. On finding the payment to be in accordance with the Form 2 order, the income-tax authority issues Form 4, certifying the validity of the declaration and payment. The FAQs specify that Form 4 is to be issued electronically within one month from the end of the month in which the payment intimation is received. Forms 1, 2 and 3 are to be annexed when Form 4 is issued as a single document.
The Rules empower the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) to lay down the data structure, standards and procedures for electronic furnishing and verification of Forms 1 to 4, including verification through digital signature where applicable or electronic verification code in other cases. The Systems Directorate is also responsible for appropriate security, archival and retrieval policies in relation to these electronic forms.
A valid declaration followed by payment carries significant statutory consequences. As clarified in the FAQs and reflected in Form 4, immunity is available, subject to the provisions of Chapter IV of the Finance Act, 2026, from the levy of further tax or penalty and from prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, in relation to the income or asset validly declared. The FAQs further clarify that the declared income or investment in the declared asset will not again be included in the taxpayer’s total income under the Income-tax Act or the Black Money Act.
At the same time, the declaration does not provide a route for reopening benefits already settled in earlier proceedings. In respect of the declared income or asset or the amount paid under the Scheme, the declarant cannot claim rectification or revision of an assessment already made, or claim set-off or relief in an appeal, reference or other proceeding relating to such assessment. Where assessment proceedings under the Income-tax Act or the Black Money Act are already pending in respect of the declared income or asset, the Assessing Officer is required to take the declaration into account while finalising the assessment.
The Scheme is, however, not available in specified excluded cases. The FAQs clarify that it does not apply to income or assets which directly or indirectly represent proceeds of crime in respect of which proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002. It is also unavailable for income or assets relating to an assessment year for which assessment proceedings have already been completed under the Black Money Act, 2015.
The detailed Rules and the accompanying FAQs thus provide an end-to-end framework—from determining eligibility and valuing different categories of foreign assets to electronic declaration, determination and payment of the amount due and final certification. Eligible taxpayers intending to avail themselves of the one-time facility are required to carefully determine the applicable category, aggregate the relevant assets and income for the prescribed threshold, compute the value as on 31 March 2026, maintain the necessary supporting documentation and complete the electronic declaration on or before 31 December 2026.
The notification and FAQs particularly seek to facilitate compliance by small taxpayers having foreign assets or income where past taxability or disclosure requirements were not fully complied with, while providing a structured route for declaration, valuation, payment and closure within the statutory framework of the Finance Act, 2026. Taxpayers are advised to examine the statutory provisions, the Foreign Assets of Small Taxpayers–Disclosure Scheme Rules, 2026 and the accompanying FAQs in their entirety while determining eligibility and making a declaration.
The Notification along with the FAQs can be accessed at: Notification No. 114/2026 , Detailed FAQs on Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026
