Last reviewed: 25 September 2026. CBDT Notification No. 114/2026, issued 14 August 2026 and effective from 16 August 2026, operationalises the Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS) enacted in Chapter IV of the Finance Act, 2026 — a structured window for taxpayers with relatively modest undisclosed foreign holdings to come forward, pay the determined amount, and obtain immunity from further tax, penalty and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Declarations must be filed by 31 December 2026. Given how severe Black Money Act exposure normally is — a flat 30% tax plus penalty up to 300% of the tax, and prosecution that can extend to imprisonment — this is a meaningful opportunity for anyone sitting on an old foreign bank account, an inherited property abroad, or shares that were never reported in the Schedule FA of an ITR. This guide sets out who qualifies, what it costs and how the process works.
Why a scheme like this exists
The Black Money Act, 2015 is deliberately harsh: undisclosed foreign assets and income attract a flat 30% tax with no deductions or set-offs, a penalty of up to three times the tax (300%), and criminal prosecution with imprisonment of up to ten years for wilful concealment. For someone with a genuinely small, often inherited or long-forgotten foreign holding — an NRE-era bank account, a flat left behind by a relative, a handful of foreign shares from an old ESOP — that exposure is wildly disproportionate to the amount involved. The 2026 scheme creates a defined, lower-friction path to regularise exactly this category of case, rather than leaving small holdings to be caught by the same enforcement machinery built for large, deliberate concealment.
Who qualifies — two categories
| Category | Ceiling (aggregate FMV) | What's included | Amount payable |
|---|---|---|---|
| Category 1 | Up to ₹1 crore | Undisclosed foreign assets and undisclosed foreign income generally — bank accounts, property, investments and related income, valued together | Tax at 30% of the value plus an additional amount equal to 100% of that tax — about 60% in all |
| Category 2 | Up to ₹5 crore | Foreign assets acquired (a) from income earned outside India while you were non-resident and not reported in Schedule FA after you became resident, or (b) from income already offered to tax in India, where the asset itself was never reported in Schedule FA | Flat fee of ₹1 lakh |
Fair market value for both categories is determined as of 31 March 2026 — not the date of declaration and not the original acquisition value. Getting this valuation right, particularly for property or unquoted shares, is one of the more technical parts of preparing a declaration. A declaration must cover the full aggregate value: if it exceeds the ceiling for the category, the declaration is barred, and you cannot declare part and leave out the rest.
What it costs: a worked computation
| Item | Category 1 route | Category 2 route |
|---|---|---|
| Foreign bank balance (FMV at 31 March 2026) | ₹60,00,000 | ₹60,00,000 |
| Undisclosed foreign income | ₹20,00,000 | — |
| Value declared | ₹80,00,000 | ₹60,00,000 |
| Tax at 30% | ₹24,00,000 | — |
| Additional amount (100% of tax) | ₹24,00,000 | — |
| Total payable | ₹48,00,000 | ₹1,00,000 (flat fee) |
Which route applies depends on where the money came from, not on your preference. The Category 2 fee is available only where the source is income earned while non-resident, or income already taxed in India; the evidence for that source is the heart of the file.
Who can and cannot declare
- Eligible: a person resident in India for the relevant year, and also a person who is now non-resident or RNOR, if they were resident when the undisclosed income arose or the foreign asset was acquired.
- Not eligible: where the income or asset represents proceeds of crime and proceedings under the Prevention of Money Laundering Act, 2002 have been initiated or are pending; or where an assessment under the Black Money Act has already been completed for that year. A pending Black Money Act assessment does not by itself bar a declaration.
Timeline to 31 December 2026
| Date / period | Step |
|---|---|
| 31 March 2026 | Valuation date for all declared assets |
| 16 August 2026 | Scheme opens (Notification 114/2026 effective) |
| By 31 December 2026 | Last date to file the Form 1 declaration |
| 2 months from the end of the month of the Form 2 order | Pay the amount determined, without interest |
| Next 2 months | Late payment allowed with simple interest of 1% per month; if full payment is not made by then, the declaration fails and amounts paid are not refunded |
| After payment | File Form 3 with proof; receive the Form 4 certificate |
The four-form process
| Form | What it does |
|---|---|
| Form 1 | Electronic declaration of the foreign assets and/or income being disclosed, filed by the taxpayer |
| Form 2 | The tax authority's order determining the amount payable on the disclosed assets |
| Form 3 | Intimation of payment made, with proof, against the Form 2 order |
| Form 4 | Final validation certificate confirming completion and granting immunity |
Once Form 2 is issued, payment is due within two months from the end of the month in which the order is received. A further two months is available with simple interest at 1% per month; if the full amount is not paid within that outer limit, the declaration is treated as invalid and anything already paid is forfeited. Diarise both dates the moment Form 2 lands.
What immunity actually covers
On completion of the process and issuance of Form 4, the taxpayer receives immunity — described in the scheme as "subject to the applicable statutory provisions" — from further tax, penalty and prosecution under the Black Money Act in respect of the disclosed assets. Two things this does not mean: first, it does not waive the amount determined as payable under Form 2 — that has to be paid; second, the "subject to applicable statutory provisions" language suggests carve-outs may apply in specific fact patterns (for instance, where other proceedings are already underway, or the source of funds itself involves separate offences). From FY 2026-27 the declared asset must be reported in Schedule FA every year, and future income from it is taxed normally — see our Schedule FA guide. Anyone considering this scheme should have their specific facts reviewed before filing Form 1, since a declaration cannot easily be walked back once made.
Worked example — a returning NRI's foreign bank account
Consider a hypothetical taxpayer who worked abroad for several years as a non-resident, saved part of that salary in a foreign bank account, and then returned to India and became resident. The account was never reported in Schedule FA after the return. The balance on 31 March 2026 is about ₹40 lakh, built from salary earned while non-resident. That source points to Category 2: the taxpayer values the account as of 31 March 2026, files Form 1 by 31 December 2026 with evidence of the non-resident-period salary, receives a Form 2 order for the ₹1 lakh fee, pays within the time allowed and receives Form 4. Interest the account earned after the return, which was never offered to tax in India, is income that arose while resident; how it is treated, and whether it has to be declared under Category 1 instead, should be confirmed on the facts before filing. Had the balance been built from undisclosed income earned while resident, Category 1 would apply and the cost would be about 60% of the value.
Before you file Form 1
- Gather complete account statements, property valuations and any documentation establishing when and how the asset was acquired, and from which income.
- Reconcile against any past ITR Schedule FA (Foreign Assets) filings, if the asset was partially disclosed before — the scheme does not allow a partial declaration, so the treatment needs to be checked against the specific facts.
- Get the 31 March 2026 fair market value professionally computed, particularly for property, unquoted shares or jewellery, where valuation approach materially affects the amount payable.
- Take advice before filing — once Form 1 is submitted and the authority issues a Form 2 determination, that process runs on the scheme's timeline, not one you control. The declaration itself must be in by 31 December 2026.
Frequently asked questions
Is this the same as the 2015 one-time compliance window under the Black Money Act?
No — that was a separate, one-time window shortly after the Black Money Act itself was enacted in 2015. This is a new scheme under Chapter IV of the Finance Act, 2026, operationalised by CBDT Notification 114/2026, with its own two categories, valuation date (31 March 2026), four-form process and a declaration window that closes on 31 December 2026.
Does the scheme cover crypto assets held abroad?
The scheme applies to 'specified foreign assets' as defined in Chapter IV of the Finance Act, 2026, and the valuation rules deal with bank accounts, tangible property and securities. Virtual digital assets are not expressly addressed. The position is under clarification; check with us before relying on it for a crypto holding.
What if I already disclosed part of a foreign asset in an earlier ITR?
The scheme is aimed at undisclosed assets and income, so partial prior disclosure needs to be reconciled carefully against what is being declared now. The scheme does not allow a partial declaration: once you declare, the complete aggregate value has to be disclosed, and if it exceeds the category ceiling the declaration is barred. This is exactly the kind of case worth a professional review before filing Form 1.
Does filing Form 1 automatically trigger scrutiny of my other tax filings?
The scheme is specifically structured around the disclosed foreign asset or income and the amount determined payable on it — it is not framed as a general scrutiny trigger. That said, any voluntary disclosure to a tax authority is worth going into with your overall tax position reviewed and consistent, rather than assuming the two are entirely walled off from each other.
What happens if I don't use the scheme and the asset is discovered later?
The scheme exists precisely because the alternative is severe — full Black Money Act exposure includes a flat 30% tax with no deductions, a penalty of up to 300% of the tax, and potential prosecution with imprisonment. With automatic exchange of financial account information between India and most major jurisdictions now well established, the risk of an undisclosed foreign asset surfacing through official channels rather than voluntary disclosure is real and rising.
Can I use this scheme if I am an NRI, not a resident Indian?
Yes, in many cases. You are eligible if you were resident in India when the undisclosed income arose or when the foreign asset was acquired, even if you are non-resident or RNOR now. Returning NRIs and former students abroad whose assets were never reported in Schedule FA after they became resident are among the people the scheme is aimed at; Category 2 specifically covers assets acquired from income earned while non-resident. Residential status for each relevant year should be confirmed before filing.
We review eligibility under the Foreign Assets Disclosure Scheme, help compute the 31 March 2026 fair market value correctly, and prepare the Form 1 declaration and supporting documentation. Getting this right the first time matters, since a filed declaration is not easily withdrawn.
Income Tax Notice Management NRI Tax Advisory Talk to us CA for NRIsThis article summarises Chapter IV of the Finance Act, 2026 and CBDT Notification No. 114/2026 (issued 14 August 2026, effective 16 August 2026) as on 25 September 2026. Operational guidance and clarifications on this scheme are still emerging — verify current procedural details and confirm your eligibility with us before filing any declaration.