The Indian government has introduced the Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS), 2026, a crucial one-time mechanism for eligible taxpayers to regularize previously unreported foreign assets or income. This initiative aims to provide a limited window for individuals to correct past omissions and avoid severe tax compliance issues.
What is FAST-DS 2026?
FAST-DS is designed for taxpayers who have either failed to report certain foreign assets or have not offered foreign income to tax. The scheme covers three main categories:
- Undisclosed foreign income.
- Undisclosed assets located outside India.
- Certain foreign assets acquired from already taxed income in India or while the taxpayer was a non-resident, but not subsequently reported in income-tax returns.
The Central Board of Direct Taxes (CBDT) has notified the FAST-DS Rules, 2026, along with detailed FAQs to clarify its application.
Who is Eligible to Use the Scheme?
The scheme is open to individuals who are or were residents of India during the relevant period and meet prescribed conditions. This includes current non-residents or those not ordinarily resident, provided they were residents when the foreign income arose or the asset was acquired.
Specific scenarios identified include:
- Employees of multinational companies who received foreign ESOPs or RSUs.
- Former students who retained overseas bank accounts.
- Returning non-residents with foreign savings or insurance policies.
- Employees deputed abroad who acquired assets.
Understanding the Disclosure Limits
The scheme features different thresholds based on the nature of the asset:
- ₹1 Crore Limit: For undisclosed foreign income and undisclosed foreign assets (where the source of investment cannot be satisfactorily explained), the aggregate value must not exceed ₹1 crore as of March 31, 2026. This can include financial interests in overseas entities.
- ₹5 Crore Limit: A more generous threshold applies to foreign assets acquired from income already taxed in India or during a period when the taxpayer was a non-resident, but were simply not reported. In such cases, the asset's value can be up to ₹5 crore as of March 31, 2026, subject to scheme conditions.
What Will Taxpayers Have to Pay?
The cost of disclosure varies:
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For Undisclosed Income/Assets (up to ₹1 crore): Taxpayers must pay 30% tax plus an additional amount equal to 100% of that tax, effectively amounting to 60% of the relevant value. For example, a ₹50 lakh asset would incur ₹15 lakh in tax and another ₹15 lakh as an additional amount, totaling ₹30 lakh.
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For Unreported but Already Taxed Assets (up to ₹5 crore): A flat fee of ₹1 lakh is payable, provided the conditions are met. If the same asset remained undisclosed over multiple years, the ₹1 lakh fee is charged only once, for the first year of non-disclosure.
Immunity and Its Conditions
A significant benefit of FAST-DS is the immunity granted to taxpayers who make a valid declaration and pay the prescribed amount. This protection shields them from tax, penalty, and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, for the income or asset covered by the declaration.
However, this protection is conditional. A declaration can be invalidated if material particulars are found to be false or if the taxpayer violates the scheme's conditions.
What Cannot Be Disclosed Under FAST-DS?
The scheme has specific exclusions:
- Income or assets representing proceeds of crime under the Prevention of Money Laundering Act, 2002.
- Cases where assessment proceedings under the Black Money Act have already been completed.
How to Make a Declaration
Declarations must be made electronically in the prescribed form and verified as per procedures. The Income Tax Department will electronically verify eligibility and compliance. Taxpayers should retain supporting documents related to asset acquisition, valuation, source of funds, and previous tax treatment before filing.
Important Note on Ongoing Reporting
FAST-DS does not replace the regular requirement for resident taxpayers to disclose foreign holdings in Schedule FA of their income-tax returns. This includes foreign bank and custodial accounts, financial interests, immovable property, and other capital assets. The scheme is intended to address specified past omissions, not to alter future reporting obligations.
When Can Taxpayers File?
The scheme will come into force on a date appointed by the Central Government via official notification. Taxpayers should monitor subsequent notifications from the Income Tax Department for the actual declaration window and last filing date.