New Tax Scheme Unveiled: Small Taxpayers Can Declare Foreign Assets with 60% Tax

Introduction to the New Disclosure Scheme

New Delhi: On Saturday, the Income Tax Department introduced a new voluntary disclosure initiative aimed at small taxpayers, allowing them to declare specific undisclosed foreign assets and income. This initiative comes with a tax rate of 60%, designed to integrate overseas holdings into the tax framework while protecting eligible taxpayers from additional penalties or legal actions.

The Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS), which was revealed in the 2026-27 Budget, will commence on August 16, with the online declaration period running until December 31, 2026, as stated by the Central Board of Direct Taxes (CBDT).

This scheme targets individuals such as students, young professionals, tech workers, and relocated non-resident Indians who may not have reported their foreign assets or income.

According to the guidelines, taxpayers will incur a 30% tax on the value of the undisclosed foreign asset or income, along with an additional amount equivalent to the tax, resulting in an effective tax rate of 60%.

The fair market value of the assets will be assessed as of March 31, 2026, as per the CBDT's announcement.

FAST-DS includes two types of declarations.

The first category pertains to undisclosed foreign assets or income that have not been previously taxed, with a maximum aggregate value of Rs 1 crore.

The second category encompasses foreign assets that were taxed earlier or acquired while the taxpayer was a non-resident but were not included in the relevant tax-return schedule. The threshold for these declarations is Rs 5 crore, with a fee of Rs 1 lakh applicable.

The CBDT emphasized that the scheme is designed to allow eligible taxpayers to disclose "certain undisclosed foreign assets, undisclosed foreign income, or undeclared foreign assets" upon payment of the specified tax or fee.

For instance, if an undisclosed foreign bank account is valued at Rs 60 lakh and the undisclosed foreign income is Rs 20 lakh, the total tax liability would amount to Rs 48 lakh, as illustrated in the CBDT's FAQs.

Taxpayers who submit valid declarations will be granted immunity from any further taxation or penalties, as well as protection from prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, concerning the disclosed assets or income.

Moreover, the declared income or the investment amount in the disclosed asset will not be counted as part of the taxpayer's total income under the Income-tax Act, 1961, or the Black Money Act, according to the CBDT.