Undisclosed foreign assets? Check if you qualify for Rs 1 lakh scheme

The Income Tax Department has asked taxpayers to disclose foreign assets omitted from their income tax returns (ITRs), with December 31, being the deadline to apply under its one-time Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS) 2026. Eligible taxpayers can declare certain foreign assets worth up to Rs 5 crore by paying a flat fee of Rs 1 lakh, subject to the scheme's conditions.

In a post on X, the Income Tax Department said FAST-DS 2026 offers eligible taxpayers a one-time opportunity to declare previously unreported foreign assets. According to the department's official FAQs, the scheme covers both foreign assets or income that were never offered to tax and assets acquired from explained sources but omitted from the relevant schedule of the ITR.

According to the Income Tax Department, the flat fee applies to foreign assets acquired from explained sources but not disclosed in the relevant schedule of the ITR. The aggregate value of these assets must not exceed Rs 5 crore as of March 31, 2026.

The department identifies two situations eligible for this category:

The Rs 1 lakh fee applies to eligible assets in this category, subject to the prescribed conditions. It is not a universal settlement fee for all undisclosed foreign assets.

According to the Income Tax Department's FAQs, a separate category covers undisclosed foreign assets or foreign income that was chargeable to tax in India but was not offered to tax. The aggregate value of the undisclosed assets and income must not exceed Rs 1 crore. 

Under Section 133 of the Finance Act, 2026, the amount payable comprises tax at 30 per cent of the value of the undisclosed foreign asset or income, plus an additional amount equal to that tax. The effective payment is therefore 60 per cent of the declared value or income.

Taxpayers should distinguish between assets bought with income that was already taxed and assets or income that were never disclosed for tax purposes, as the applicable payment differs significantly.

According to the department's Form 1 user manual, the scheme broadly covers people who were residents of India under Section 6 of the Income Tax Act in the relevant previous year. Certain people who are currently non-residents or residents but not ordinarily residents (RNORs) may also qualify if they were residents in the year to which the undisclosed foreign income relates or in which the foreign asset was acquired.

The department's official portal specifies the following process:

File Form 1: Submit the declaration online through the Income Tax Department's e-filing portal by December 31, 2026.

Receive Form 2: The department issues an order determining the amount payable within one month from the end of the month in which Form 1 is submitted.

Pay and submit Form 3: Pay the prescribed amount using challan ITNS 289 and submit the intimation of payment within four months from the end of the month in which Form 2 is issued.

Receive Form 4: The department issues an order certifying the validity of the declaration and payment within one month from the end of the month in which Form 3 is submitted.

According to the department's user manual, a valid declaration and payment provide immunity from further tax, penalty and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, for the items declared, subject to the prescribed conditions.

The department states that the scheme commenced on August 16, 2026, and no declaration can be filed after December 31, 2026. It also specifies March 31, 2026, as the valuation date for foreign assets covered by the scheme.