Overview

The Foreign Assets of Small Taxpayers–Disclosure Scheme (FAST-DS) 2026 is a one-time voluntary disclosure mechanism notified by the Central Board of Direct Taxes (CBDT) under the Finance Act, 2026. The scheme aims to bring small-value undisclosed foreign assets and income into the tax net through voluntary compliance.

Key Facts

Scheme Timeline

  • Effective Date: 16th August 2026
  • Declaration Period: Until 31st December 2026
  • Valuation Date: 31st March 2026

Eligibility Criteria

An eligible assessee includes:

  • A person who was resident in India in the relevant previous year
  • Currently non-resident or Resident but Not Ordinarily Resident (RNOR) persons may also avail the scheme if they were resident in India in the year to which the undisclosed foreign income relates or in the year when the foreign asset was acquired

Categories of Declaration

Category I – Undisclosed Foreign Asset/Income:

  • Covers foreign assets or income not previously offered to tax
  • Maximum aggregate value: ₹1 crore
  • Tax payable: 60% effective rate (30% tax + 100% additional amount equal to tax)
  • Example: Declared asset value of ₹80 lakh requires payment of ₹48 lakh

Category II – Undeclared Foreign Asset:

  • Covers foreign assets already offered to tax or acquired when assessee was non-resident
  • Not disclosed in relevant income-tax return schedule
  • Maximum aggregate value: ₹5 crore
  • Fee payable: Flat ₹1 lakh

Valuation of Foreign Assets

General Fair Market Value (FMV) Rule:

  • Higher of cost of acquisition OR open-market value as on 31st March 2026
  • All values must be reported in Indian Rupees using prescribed foreign-exchange conversion rules

Alternative Valuation:

  • Indexed cost of acquisition may be treated as FMV where market valuation is not carried out
  • Separate valuation rules apply to:
  • Jewellery
  • Securities
  • Unquoted shares
  • Immovable property
  • Foreign bank accounts
  • Interests in foreign partnerships/Limited Liability Partnerships (LLPs)

Benefits of Scheme

  • Immunity from:
  • Further tax or penalty
  • Prosecution under the Black Money Act, 2015
  • Declared income/amount invested not included in total income under Income-tax Act, 1961 or Black Money Act, 2015

Limitations on Declarants

  • Cannot subsequently seek rectification or revision of assessment
  • Cannot claim set-off or relief in related proceedings for income/asset declared or amount paid

Exclusions from Scheme

FAST-DS is unavailable for:

  1. Income or assets representing proceeds of crime where proceedings initiated/pending under Prevention of Money-laundering Act, 2002
  2. Income/assets relating to assessment year for which proceedings already completed under Black Money Act, 2015

Significance

  • Brings small-value undisclosed foreign assets and income into the tax net
  • Promotes voluntary compliance approach
  • Offers certainty to eligible taxpayers against further penalties and prosecution
  • Supports government's initiatives against black money and tax evasion

Constitutional/Legal Provisions

  • Finance Act, 2026 – Enabling legislation
  • Black Money Act, 2015 – Related black money legislation (immunity from prosecution)
  • Prevention of Money-laundering Act, 2002 – Exclusion criterion
  • Income-tax Act, 1961 – Related income tax provisions
  • Foreign Exchange Management Act (FEMA) – Governs foreign asset regulations

Related Previous Year Questions

Prelims 2025: Questions on income tax provisions related to agricultural activities and rural land

Mains 2021: Questions on money laundering through emerging technologies and globalisation, with measures to tackle the problem

Key Terminology

  • FMV: Fair Market Value
  • RNOR: Resident but Not Ordinarily Resident
  • LLP: Limited Liability Partnership
  • CBDT: Central Board of Direct Taxes
  • PMLA: Prevention of Money Laundering Act