foreign assets disclosure scheme

The Income Tax Department has notified detailed rules for the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, opening a one-time compliance window from August 16. Eligible taxpayers can voluntarily disclose previously unreported overseas assets or foreign income and obtain protection from harsher penalties and prosecution after making the prescribed payment. Foreign Assets Disclosure Window Opens August 16 Declarations must be filed electronically in Form 1 between August 16 and December 31, 2026. The scheme can cover eligible undisclosed foreign assets or income relating to previous years. Residents, non-residents and Resident but Not Ordinarily Resident taxpayers may qualify if they were Indian residents during the year in which the relevant foreign income arose or the asset was acquired. Two Categories Get Different Tax Treatment The first category covers foreign assets or income that were never offered to tax. Such declarations are permitted where the aggregate asset value does not exceed ₹1 crore as of March 31, 2026. Taxpayers under this category must pay 30% tax plus an additional amount equal to the tax, effectively taking the payment to 60%. A second category covers foreign assets of up to ₹5 crore where the underlying income was already taxed, or the asset was acquired while the person was a non-resident, but the asset was not properly disclosed. These cases attract a fixed ₹1 lakh fee. Scheme Offers Immunity From Black Money Penalties Once a valid declaration is accepted and the required amount is paid, taxpayers receive protection from additional tax, penalties and prosecution under the Black Money Act for the disclosed assets. However, the scheme excludes certain cases involving proceeds of crime or matters already concluded under the Black Money Act.

Foreign Assets Disclosure Window Opens August 16

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