1,100 Declarations Filed Under Foreign Assets Disclosure Scheme Ahead of Deadline

As the deadline for the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS) approaches on December 31, approximately 1,100 taxpayers have submitted their declarations, according to sources within the finance ministry. The scheme was introduced in the Union Budget 2026-27 and became effective starting August 16, 2026.

FAST-DS offers a limited-time opportunity for eligible taxpayers to disclose certain foreign assets and income that were either omitted from previous tax returns or not declared for taxation, subject to specific conditions. This initiative aims to encourage voluntary compliance by providing a clear pathway for taxpayers to regularise their foreign holdings.

The Income Tax department has taken proactive steps to identify taxpayers who may hold residential or commercial properties abroad, particularly in the United Arab Emirates, which might not have been reported to tax authorities. These individuals have been contacted directly and urged to take advantage of the scheme to declare their overseas assets.

Following a high-level meeting on October 23, the department decided to enhance transparency by sharing additional information about foreign assets with taxpayers whenever possible. This move is intended to assist taxpayers in recognizing any undisclosed holdings subject to the scheme.

Efforts to raise awareness are also underway. The Central Board of Direct Taxes (CBDT) is organizing outreach programs involving corporations, educational organizations, professional bodies, and industry groups. Additionally, regional committees led by Principal Chief Commissioners of Income Tax have been established to address queries and support taxpayers throughout the disclosure process.

Taxpayers can now access a feature on the Income Tax e-filing portal that allows them to view and download data on foreign assets linked to their Permanent Account Numbers (PANs). This information is sourced from overseas jurisdictions through the Automatic Exchange of Information (AEOI) framework, including standards like the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA). Data for calendar years 2022, 2023, and 2024 is currently available.

It is important to note that this portal only includes information from jurisdictions adhering to CRS and FATCA. Data from other international agreements is excluded due to confidentiality or risk factors. The department also gathers intelligence from various other sources and plans to share relevant details with taxpayers to facilitate compliance.

The scheme categorizes declarations into two main groups. The first allows taxpayers to declare undisclosed foreign assets or income valued up to ₹1 crore. Under this category, a tax of 30 percent on the fair market value as of March 31, 2026, is levied, along with an equal amount as a penalty. This results in a combined payment of 60 percent.

The second category pertains to foreign assets acquired either from income already taxed or during a taxpayer’s non-resident period, which were not reported in Schedule FA of the income tax return. This category covers assets valued up to ₹5 crore and requires a flat payment of ₹1 lakh. Both categories offer immunity from further assessments, penalties, or prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Some experts have raised concerns regarding the scheme’s limitations. Sandeep Bhalla, partner at Dhruva Advisors, highlighted that the monetary caps and tax rates may discourage taxpayers, especially those holding inherited foreign assets, from coming forward. Bhalla pointed out that many such taxpayers might lack the liquidity needed to pay taxes based on the current market value of their assets.

To improve compliance, Bhalla recommended expanding eligibility criteria, removing value limits on inherited assets, and extending the disclosure deadline to March 31, 2027. He also suggested offering immunity specifically to taxpayers declaring inherited foreign properties.

Besides the two main categories, the scheme permits taxpayers to report accounted foreign assets by paying a ₹1 lakh fee. This option helps avoid the annual non-reporting penalty of ₹10 lakh imposed under the Black Money Act, providing another compliance route.

The FAST-DS scheme represents a significant step by Indian authorities to increase transparency and compliance in foreign asset reporting. With the deadline nearing, the government’s outreach efforts and expanded data sharing aim to encourage taxpayers to regularize their foreign holdings in a timely manner.