Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS): A Detailed Guide for Taxpayers

Introduction

The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS) is a one-time voluntary disclosure mechanism introduced under Chapter IV, Sections 130 to 144 of the Finance Act, 2026, read with the Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026.

The scheme provides an opportunity to eligible taxpayers to disclose certain undisclosed foreign assets, undisclosed foreign income, or foreign assets that were not reported in the relevant return, subject to prescribed conditions, monetary thresholds, valuation rules and payment requirements.

The scheme commences on 16 August 2026, while the last date for filing a declaration is 31 December 2026. The prescribed valuation date is 31 March 2026.

For taxpayers having foreign bank accounts, overseas properties, foreign securities, investments or foreign-source income that may not have been properly disclosed, understanding the scope and conditions of FAST-DS is therefore important.

1. What is FAST-DS 2026?

FAST-DS is designed as a one-time voluntary disclosure scheme.

It enables eligible taxpayers to make a declaration in respect of specified foreign assets and foreign income by complying with the conditions prescribed under the Finance Act, 2026 and the associated Rules.

The scheme broadly covers two situations:

Undisclosed foreign assets or undisclosed foreign income; and
Certain foreign assets that were not disclosed in the relevant schedule of the income-tax return, despite the asset or underlying income being otherwise covered by the prescribed conditions.

The entire declaration process is to be undertaken electronically through the prescribed income-tax authority.

2. Important Dates Under FAST-DS

Three dates are particularly important:

Particular	Date
Scheme commencement	16 August 2026
Valuation date	31 March 2026
Last date for declaration	31 December 2026

The declaration cannot be filed after 31 December 2026 according to the FAQ.

The valuation date is particularly significant because the prescribed Fair Market Value (FMV) of assets has to be determined with reference to 31 March 2026.

3. Who is Eligible to Make a Declaration?

The eligibility provisions take into account the taxpayer's residential status.

An eligible assessee may include a person who:

was resident in India under Section 6 of the Income-tax Act, 1961, in the relevant previous year; or
was a non-resident or Resident but Not Ordinarily Resident (RNOR) in the relevant previous year but was resident in India in the previous year to which the undisclosed foreign income relates or in the year in which the foreign asset was acquired.

This is an important aspect for individuals who have changed their residential status over the years.

A person who is presently non-resident may still be eligible where the prescribed historical residency conditions are satisfied.

The residential status applicable to the relevant year is therefore an important part of the eligibility analysis.

4. On What Grounds Can a Declaration Be Made?

The FAQ identifies three situations in which a declaration may be made.

A taxpayer may fall within the scheme where the taxpayer:

A. Failed to file a return

The taxpayer failed to furnish a return under Section 139 of the Income-tax Act, 1961.

B. Failed to disclose the asset or income

The taxpayer furnished a return but did not disclose the relevant foreign asset or foreign income.

C. Income or asset escaped assessment

The relevant income or asset has escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961.

The declaration must be filed during the prescribed window:

16 August 2026 to 31 December 2026.

5. What Can Be Declared?

FAST-DS broadly recognises two categories.

Category 1: Undisclosed Foreign Asset or Undisclosed Foreign Income

This category covers:

an undisclosed asset located outside India; or
undisclosed foreign income that was chargeable to tax in India but was not offered to tax.

The FAQ defines an undisclosed foreign asset as an asset, including a financial interest in an entity, located outside India and held by the assessee or beneficially owned by the assessee, where the source of investment is not explained or the explanation is considered unsatisfactory by the Assessing Officer.

Monetary threshold

The aggregate value of:

the undisclosed foreign asset; and
undisclosed foreign income

must not exceed:

₹1 crore

for the relevant declaration under Section 133, Table Sl. No. 1.

6. Category 2: Foreign Assets Not Disclosed in the Return

The second category relates to certain foreign assets which:

were already offered to tax; or
were acquired when the assessee was a non-resident,

but were not disclosed in the relevant foreign-asset schedule of the income-tax return.

For this category, the aggregate value of the foreign assets must not exceed:

₹5 crore.

This distinction between the ₹1 crore and ₹5 crore thresholds is one of the most important aspects of the scheme.

7. Amount Payable Under the Scheme

The amount payable depends upon the category under which the declaration is made.

Category 1 — 30% Tax + Additional 100%

For an undisclosed foreign asset or undisclosed foreign income, the amount payable consists of:

Tax at 30% of the value of the undisclosed foreign asset or undisclosed foreign income; and
An additional amount equal to 100% of the tax payable.

Thus, in the example provided in the FAQ, the total financial outgo effectively equals 60% of the relevant declared value/income.

Example

Suppose:

Foreign bank account = ₹60 lakh
Undisclosed foreign income = ₹20 lakh

The calculation is:

Particular	Value	Tax @ 30%	Additional amount	Total payable
Foreign bank account	₹60 lakh	₹18 lakh	₹18 lakh	₹36 lakh
Foreign income	₹20 lakh	₹6 lakh	₹6 lakh	₹12 lakh
Total	₹80 lakh	₹24 lakh	₹24 lakh	₹48 lakh

This example is specifically provided in the FAST-DS FAQ.

8. Amount Payable for Category 2

For the second category, the FAQ prescribes a:

Flat fee of ₹1 lakh

provided the aggregate value of the foreign assets does not exceed ₹5 crore.

If the aggregate value exceeds ₹5 crore, the taxpayer is not eligible to avail the scheme under this category.

For example, where the foreign assets have an aggregate value of ₹6.5 crore, the FAQ states that the taxpayer would not be eligible for the scheme.

9. Valuation of Foreign Assets

Valuation is one of the most important compliance requirements under FAST-DS.

The general principle for determining FMV is that it is the higher of:

The cost of acquisition; or
The price the asset would ordinarily fetch if sold in the open market on the valuation date.

The valuation date is:

31 March 2026

Where the prescribed market valuation is not carried out, the indexed cost of acquisition is deemed to be the FMV.

The valuation methodology varies depending upon the nature of the asset.

10. Valuation of Bullion, Jewellery and Precious Stones

For bullion, jewellery and precious stones, FMV is generally the higher of:

cost of acquisition; or
open-market price on the valuation date.

Where the relevant market valuation is not carried out, indexed cost of acquisition is treated as FMV. A recognised valuer's report may be relevant where valuation is undertaken.

11. Valuation of Paintings, Sculptures and Artistic Works

For archaeological collections, paintings, sculptures and other artistic works, the FAQ similarly provides for the higher of:

cost of acquisition; or
open-market price on the valuation date.

A recognised valuation report may support the market valuation. If such valuation is not carried out, indexed cost of acquisition is treated as FMV.

12. Valuation of Quoted Shares and Securities

For quoted shares and securities, the FMV is generally determined by comparing:

cost of acquisition; and
the prescribed market-price calculation based on the lowest and highest quoted price on an established securities market on the valuation date.

If there is no trading on the valuation date, the FAQ provides that the relevant calculation is based on the nearest preceding date on which the shares or securities were traded.

13. Valuation of Unquoted Equity Shares

For unquoted equity shares, the valuation mechanism is more detailed.

The prescribed formula takes into account factors including:

book value of specified assets;
FMV of bullion and jewellery;
shares and securities;
immovable property;
specified liabilities;
paid-up value of equity shares; and
other prescribed parameters.

The FMV is the higher of the cost of acquisition and the value determined under the prescribed formula.

Where the valuation is not carried out, indexed cost of acquisition is deemed to be FMV.

14. Valuation of Foreign Immovable Property

Foreign property is valued with reference to:

cost of acquisition; and
open-market value as on 31 March 2026.

The FAQ refers to a valuation report from a valuer recognised by the government or its agency in the country where the property is situated.

If such valuation is not carried out, indexed cost of acquisition is treated as FMV.

15. Valuation of Foreign Bank Accounts

Foreign bank accounts require special attention.

According to the FAQ, the value is determined by considering the sum of deposits made into the account from the date of opening up to the valuation date, subject to specified exclusions.

One important exclusion relates to deposits that represent proceeds of withdrawals from the same account, in order to prevent double counting.

Illustration

The FAQ gives an example of a bank account opened in 2010, involving deposits and withdrawals over several years.

After applying the prescribed adjustments, the value of the asset is calculated at US$4,900, which is then converted into Indian Rupees as on 31 March 2026 for the purpose of valuation.

This demonstrates that the valuation methodology for a foreign bank account may not simply be the closing balance appearing on 31 March 2026.

16. Foreign Bank Account Previously Declared Under the Black Money Act

A separate mechanism applies where the foreign bank account was previously declared under Chapter VI of the Black Money Act, 2015, and tax and penalty had already been charged.

In such a case, the FAQ states that only deposits made after the relevant earlier declaration are aggregated, subject to the prescribed rules.

The FAQ's example calculates the relevant value at US$3,100, which is then converted into Indian Rupees as on 31 March 2026.

17. Foreign Partnership, AOP or LLP Interest

Where the taxpayer has an interest in a foreign partnership firm, AOP or LLP, the FAQ provides a specific allocation mechanism.

The process begins with determining the net assets of the firm/AOP/LLP as on the valuation date.

The portion of net assets equal to the capital contributed is allocated among partners or members in the ratio of their capital contribution.

The residual net assets are then allocated according to the partnership or association agreement governing distribution upon dissolution, or, in its absence, according to the profit-sharing ratio.

18. Avoiding Double Counting of Assets

An important principle under the valuation rules is prevention of double counting.

Suppose the sale proceeds of one foreign asset are used to acquire another foreign asset.

The value of the old asset or bank account is reduced by the amount reinvested in the new asset, while the newly acquired asset is separately valued under the applicable valuation rules.

This is particularly relevant where foreign investments are frequently transferred or reinvested.

19. Foreign Currency Conversion

All values under the declaration are required to be reported in Indian Rupees.

The FAQ provides a prescribed mechanism for conversion of foreign currency.

Where the relevant currency is one of the currencies designated by the Reserve Bank of India under the specified regulations, conversion is made using the RBI reference rate on the valuation date.

For other currencies, the FAQ provides a two-stage conversion mechanism involving conversion into US Dollars and thereafter into Indian Rupees using the applicable RBI reference rate.

Accordingly, the valuation date of 31 March 2026 becomes relevant not only for asset valuation but also for foreign currency conversion.

20. 20% Variation in Declared FMV

The FAQ provides a specific protection concerning valuation differences.

For assets other than bank accounts, a variance not exceeding 20% between the FMV declared by the taxpayer and the FMV subsequently determined by the Assessing Officer will not, by itself, render the declaration invalid or void on the specified grounds of:

misrepresentation;
suppression of facts; or
furnishing false particulars.

This provision is referred to in the FAQ under Rule 5(2).

The special treatment of bank accounts should therefore be noted carefully.

21. How to File the Declaration — Form 1

The declaration is required to be filed electronically in:

Form 1

The taxpayer can declare more than one asset or more than one type of asset/income in a single Form 1.

The relevant portions of the Form and its annexures can be repeated as required for multiple assets or income items.

22. Supporting Documents and Valuation Reports

Documentation is an important part of the disclosure process.

Form 1 requires supporting documents evidencing:

acquisition of the asset;
earning of the income; and
valuation reports where valuation has been carried out.

Valuation reports may be particularly relevant for:

foreign immovable property;
jewellery;
artistic works;
unquoted shares and securities; and
other assets where valuation is undertaken.

Therefore, taxpayers should not approach the declaration merely as a tax-payment exercise. The documentary trail supporting the declaration is equally important.

23. What Happens After Filing Form 1?

Once Form 1 is submitted, the declaration undergoes electronic verification.

The prescribed income-tax authority then communicates the amount payable through:

Form 2

The FAQ states that Form 2 is to be communicated within one month from the end of the month in which the declaration was made.

24. Time Limit for Payment

The amount determined in Form 2 is normally required to be paid within:

Two months from the end of the month in which the order is received.

If the taxpayer cannot make the payment within that period, the FAQ allows a further period of up to two months, subject to:

1% simple interest for every month or part of a month of delay.

There is also an outer time limit.

The maximum additional period allowed is four months from the end of the month in which the original Form 2 payment order was passed.

If payment is not made within the applicable outer limit, the benefit of the scheme ceases for that declaration.

25. Form 3 — Intimation of Payment

After making the required payment, the taxpayer has to furnish an electronic intimation of payment along with proof of payment.

This is done through:

Form 3

The proof should also include interest, where applicable.

26. Form 4 — Certification of Payment

Once the Form 3 intimation is verified and found to be in accordance with the Form 2 order, the income-tax authority issues:

Form 4

Form 4 serves as the electronic order certifying the payment.

The FAQ states that this is issued within one month from the end of the month in which the Form 3 intimation was received.

27. What Immunity Does a Valid Declaration Provide?

One of the key benefits of a valid declaration is the specified immunity available after payment.

According to the FAQ, immunity is provided from:

further tax;
penalty; and
prosecution

under the Black Money Act, 2015, in respect of the income or asset declared under the scheme.

The FAQ further states that the income or amount of investment in the declared asset will not be included in total income under the Income-tax Act, 1961 or the Black Money Act, 2015, as specified in the scheme.

The benefit is therefore linked to a valid declaration and payment.

28. Restriction on Subsequent Claims

A taxpayer should also understand the consequence of making a declaration.

In respect of the income or asset declared, or the amount paid, the declarant cannot subsequently claim:

rectification;
revision;
set-off; or
relief

in relation to specified assessments under the Income-tax Act or Black Money Act merely on account of the declaration.

Therefore, the decision to make a declaration should be taken after reviewing the relevant facts, records and existing assessment position.

29. What if Assessment Proceedings Are Already Pending?

Where assessment proceedings under the Income-tax Act or the Black Money Act are pending in respect of the declared income or asset, the FAQ states that the Assessing Officer is required to take the declaration into account while finalising the assessment order.

This makes it important to examine the current litigation and assessment status before deciding the appropriate course of action.

30. When is FAST-DS Not Available?

The scheme contains important exclusions.

It does not apply to:

Proceeds of Crime

Any income or asset which directly or indirectly represents proceeds of crime where proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002.

Completed Black Money Act Assessment

The scheme also does not apply to income or assets relating to an assessment year for which assessment proceedings under the Black Money Act, 2015 have already been completed.

These exclusions must be examined before assuming that the scheme is available.

31. Practical Compliance Approach for Taxpayers

For a taxpayer considering FAST-DS, a structured approach would be advisable.

Step 1 — Identify all foreign assets and income

Prepare an asset-wise and income-wise inventory covering:

foreign bank accounts;
foreign property;
foreign shares and securities;
foreign investments;
partnership/LLP interests;
jewellery and precious stones;
artistic works; and
other foreign assets or foreign-source income covered by the scheme.

Step 2 — Determine the relevant year

Identify:

year of acquisition;
year of earning of foreign income;
residential status for the relevant year; and
whether the asset or income was previously disclosed or taxed.

Step 3 — Determine the applicable category

Establish whether the asset/income falls under:

Category 1 — ₹1 crore threshold

Category 2 — ₹5 crore threshold.

Step 4 — Determine FMV

Calculate the value as on:

31 March 2026

using the applicable asset-specific valuation methodology.

Step 5 — Collect supporting documents

Maintain evidence relating to:

acquisition;
source;
income;
ownership;
previous disclosure;
previous taxation;
valuation; and
foreign currency conversion.

Step 6 — Calculate the amount payable

Determine whether the declaration attracts:

30% tax plus an additional amount equal to the tax; or
₹1 lakh flat fee under the applicable category.

Step 7 — File Form 1

Submit the declaration electronically with the required annexures and supporting documentation.

Step 8 — Process Form 2

Review the amount communicated by the authority and make payment within the prescribed period.

Step 9 — File Form 3

Submit payment intimation and proof electronically.

Step 10 — Obtain Form 4

Preserve the final certification of payment issued by the authority.

32. Key Numbers to Remember

For quick reference:

Parameter	Requirement
Scheme starts	16 August 2026
Valuation date	31 March 2026
Declaration deadline	31 December 2026
Category 1 threshold	₹1 crore
Category 1 payment	30% tax + 100% additional amount equal to tax
Category 2 threshold	₹5 crore
Category 2 payment	₹1 lakh
Form for declaration	Form 1
Amount determined through	Form 2
Payment intimation	Form 3
Payment certification	Form 4
Additional payment period	Up to 2 months, subject to conditions
Interest on delayed payment	1% simple interest per month or part thereof
Valuation tolerance for assets other than bank accounts	Up to 20%, subject to Rule 5(2) conditions

Conclusion

The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS) provides a limited, one-time mechanism for eligible taxpayers to address specified foreign asset and foreign income disclosure issues.

However, the scheme should not be viewed simply as an opportunity to pay a prescribed amount and close the matter.

Eligibility depends on several interconnected factors, including:

residential status;
nature of the asset or income;
year of acquisition or earning;
previous disclosure and taxation;
valuation as on 31 March 2026;
applicable monetary threshold;
documentary evidence;
existing assessment proceedings; and
statutory exclusions.

The distinction between the ₹1 crore Category 1 threshold and the ₹5 crore Category 2 threshold is particularly important.

Equally important is the fact that the declaration window is limited:

16 August 2026 to 31 December 2026

A taxpayer considering FAST-DS should therefore undertake a proper asset identification, eligibility review, valuation exercise and document verification before filing Form 1.

The information in this article is based on the FAST-DS 2026 FAQ document provided for this discussion. It is intended for compliance awareness and should be read together with the applicable provisions of the Finance Act, 2026 and the Rules. Individual cases may require a fact-specific legal and tax review.