FAST-DS 2026: Foreign Assets of Small Taxpayers – Disclosure Scheme

Context:

Recently, The Income Tax Department has opened a one-time voluntary disclosure window under the Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS) from August 16 to December 31, 2026. The scheme allows eligible taxpayers to regularise certain undisclosed foreign income and assets within specified limits.

What is FAST-DS?

• • • FAST-DS is aimed at taxpayers such as students, young professionals, technology employees and relocated NRIs who may have failed to report foreign income or assets in their Income Tax Returns (ITRs).
    • It covers two broad categories: undisclosed foreign income or assets up to ₹1 crore, and certain foreign assets up to ₹5 crore that were already taxed or acquired while the taxpayer was a non-resident but were not reported in the relevant ITR schedule.

What Can Be Disclosed?

• • • Taxpayers can disclose foreign bank accounts, immovable property, jewellery, artistic works, shares, securities and other foreign assets or income. Unreported Restricted Stock Units (RSUs) and Employee Stock Options (ESOPs) can also fall within the scheme.
    • However, the limits are absolute ceilings, not slabs. Therefore, foreign undisclosed income of ₹1.5 crore or an eligible foreign asset worth ₹6.5 crore cannot be brought under the respective categories.

Tax and Payment:

• • • For undisclosed foreign income or assets up to ₹1 crore, the taxpayer must pay 30% tax and an additional 30% income tax in lieu of penalty to obtain immunity from prosecution.
    • For certain foreign assets up to ₹5 crore that were acquired from already-taxed income or while the taxpayer was a non-resident, disclosure can be made by paying a ₹1 lakh fee.

Immunity under the Scheme:

• • • After making a valid declaration and completing the required payment, taxpayers receive immunity from further tax, penalty and prosecution under the Black Money Act, 2015, with respect to the declared income or assets.
    • The scheme, however, does not cover assets representing proceeds of crime where proceedings under the Prevention of Money-laundering Act, 2002 have been initiated or are pending.

Why Is the Scheme Important?

• • • The Income Tax Department already receives information about overseas financial assets through international information-sharing mechanisms such as Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA).
    • Such information is also reflected in taxpayers' Annual Information Statements (AIS). Therefore, FAST-DS provides a limited opportunity to correct historical reporting gaps before they potentially result in significant penalties.

Valuation of Foreign Assets:

• • • The valuation date under the scheme is March 31, 2026. The Fair Market Value (FMV) is generally the higher of the cost of acquisition and the price the asset could ordinarily fetch in the open market on that date.
    • Specific valuation rules apply to quoted and unquoted shares, securities, immovable property and interests in foreign partnerships or LLPs.

How to Make Disclosure?

• • • Declarations have to be filed electronically through Form 1. The prescribed payment must generally be made within two months of the order passed by the income-tax authority.
    • A delay may attract 1% simple interest for every month or part of a month, subject to the maximum period prescribed under the scheme.

Significance:

FAST-DS represents a targeted attempt to balance tax compliance with practical difficulties faced by small taxpayers. It gives eligible individuals a temporary opportunity to regularise foreign assets while strengthening India's tax transparency framework.