Opened a bank account abroad and forgot to report it? Here's the fix

Missed reporting a foreign bank account or asset after returning to India? Budget 2026 opens a one-time six-month window to fix it without prosecution

Opened a bank account while studying abroad and forgot to report it after returning to India? There is some relief now. Finance Minister Nirmala Sitharaman on Sunday announced an amnesty scheme for small taxpayers such as students, young professionals, tech employees and relocated NRIs who failed to disclose foreign income or assets in their income tax returns.

 

The proposal introduces a one-time, six-month foreign asset disclosure window. It applies to two categories of taxpayers: those who did not disclose overseas income or assets at all, and those who disclosed income and paid tax but failed to declare the asset acquired.

 

 

Cases involving prosecution or proceeds of crime will remain outside the scheme.

 

Under the proposal, taxpayers with undisclosed overseas income or assets of up to Rs 1 crore will be required to pay 30 per cent of the undisclosed income or the fair market value of the asset, along with an additional 30 per cent tax in place of penalty, to avoid prosecution.

 

For taxpayers who disclosed their income but did not declare foreign assets of up to Rs 5 crore, the scheme offers immunity from penalty and prosecution on payment of a fee of Rs 1 lakh. Under the existing black money law, such violations attract a penalty of Rs 10 lakh along with prosecution.

 

How the scheme works in practice

 

Tax experts say the scheme is particularly relevant for former students and early-career professionals who may have overlooked disclosure rules after returning to India.

 

Jay Parmar, co-founder and partner at Aurtus, explained the working of the scheme with an example. “A student who studied in the UK opened a local bank account, funded from income already taxed in India, to meet everyday expenses. After returning and becoming a tax resident, she remained unaware of the disclosure requirement and did not report the account, which now holds Rs 7 lakh. Under this scheme, such taxpayers can regularise past omissions by paying a fee of Rs 1 lakh,” said Parmar.

 

He added that the Budget also proposes protection from prosecution under the Black Money Act for foreign non-immovable assets valued below Rs 20 lakh, with retrospective effect from October 1, 2024. “Together, these measures provide comfort to small taxpayers and nudge them towards voluntary disclosure of foreign assets,” Parmar said.

 

What the finance minister said

 

Sitharaman said the amnesty scheme is meant to deal with practical difficulties faced by small taxpayers such as students, young professionals, tech employees and relocated NRIs.

 

“I propose to introduce a one-time six-month foreign asset disclosure scheme for these taxpayers to disclose income or assets below a certain size,” she said.

 

The Explanatory Memorandum to the Budget notes that non-compliance under the foreign black money law is common in cases involving legacy or inadvertent non-disclosures. These include foreign employment benefits such as ESOPs or RSUs, dormant or low-value bank accounts of former students, savings or insurance policies of returning non-residents, and assets held during overseas deputation.

 

It also points to data received under the Automatic Exchange of Information framework, which shows non-disclosure of foreign financial assets by a large number of PAN holders.