FAST-DS 2026: Have undisclosed overseas crypto assets? Know the ₹1 crore and ₹5 crore threshold rules before you disclose

If you hold cryptocurrency or other virtual digital assets (VDAs) on an overseas platform and have not disclosed them in India, the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS 2026), could become important for you.

The scheme creates a route for eligible taxpayers to disclose certain previously unreported foreign assets or income by paying a prescribed amount. But the treatment can differ sharply depending on how the asset was funded and whether the income used to acquire it was already taxed in India.

So, who can use FAST-DS 2026, how are overseas crypto holdings valued, what do the ₹1 crore and ₹5 crore thresholds mean, and does disclosure protect you from future tax and prosecution risks?

FAST-DS 2026: Why overseas crypto holdings can become a tax issue

Virtual digital assets are already covered under India's tax framework. But holding an asset overseas can create an additional disclosure requirement for a taxpayer who is required to report foreign assets.

VDAs can fall within the foreign-asset disclosure framework where they qualify as foreign assets or financial interests for Schedule FA reporting, says Palak Gupta, Jotwani Associates.

This means the first question for a taxpayer is not simply whether the crypto is taxable. It is also where the asset is held, who owns it, when it was acquired and what income was used to buy it.

The treatment under FAST-DS 2026 requires examining the taxpayer's residential status, the source of the money used to acquire the asset and the jurisdiction in which the asset is held, says Gupta.

This distinction becomes particularly relevant for crypto investors using overseas exchanges or platforms.

Indian crypto platform vs overseas platform: Why location matters

Not every crypto holding necessarily falls into the same category under the scheme.

According to Gupta, assets held through Indian-regulated platforms such as CoinDCX or Mudrex would have a domestic situs and would therefore fall outside the scope of FAST-DS 2026, whereas accounts with offshore platforms that are not registered with India's Financial Intelligence Unit-India (FIU-IND) could constitute undisclosed foreign assets.

The practical point for investors is to establish where the asset is legally situated and what platform or arrangement holds it, rather than assuming that every crypto investment is a foreign asset simply because cryptocurrency itself is a global asset.

FAST-DS 2026 Category A vs Category B: The source of money matters

The scheme, according to Gupta's interpretation of the provisions, broadly creates two disclosure categories.

Category B covers foreign assets where the underlying income was already disclosed or taxed.

In such cases, Gupta says a flat fee of ₹1 lakh applies where the aggregate fair market value (FMV) of the relevant foreign assets does not exceed ₹5 crore as on March 31, 2026.

This can be particularly relevant where a taxpayer used already-taxed income to buy an overseas asset but failed to make the required foreign-asset disclosure.

Category A, on the other hand, covers cases involving undisclosed income. This could include VDAs acquired using cash or unreported income, including undisclosed freelance receipts or unoffered crypto-to-crypto trading gains.

“The threshold of INR 1 crore applies where the income, from which undisclosed foreign asset was acquired, was not offered to tax in India or any undisclosed foreign income,” says Abheet Sachdeva, Partner, Nangia Global.

For Category A, the combined effective liability is 60%, comprising 30% tax plus an additional penalty equal to 100% of that tax, subject to the scheme's specified conditions and the ₹1 crore aggregate threshold, says Gupta.

“The thresholds are examined on an aggregate basis, rather than separately for each undisclosed foreign asset / income. Therefore, where a taxpayer holds multiple undisclosed foreign assets, their aggregate fair market values need to be considered, along with the relevant undisclosed foreign income, for determining the applicable category,” adds Sachdeva.

How should overseas crypto be valued on March 31, 2026?

Valuation could be one of the most difficult parts of a crypto disclosure.

Unlike a listed share traded on a recognised exchange, the same crypto token can trade at different prices across platforms. Some tokens may also have very low trading volumes.

FAST-DS 2026 does not prescribe a specific valuation methodology for crypto assets, says Sachdeva.

According to his interpretation, crypto would therefore be valued under the rule applicable to “any other asset”.

Under that approach, the value would generally be the higher of:

·the cost of acquisition or amount invested; and

·the price the asset would fetch if sold in an arm's-length transaction in the open market on March 31, 2026.

If the second valuation is not carried out, indexed cost of acquisition would be considered as the FMV, according to Sachdeva.

However, he points out that there is no specific guidance on which exchange price should be used when a crypto asset trades on multiple exchanges or when liquidity is very low.

That creates an important practical issue for taxpayers.

If you are making a declaration, preserve evidence showing how you arrived at the valuation. This could include exchange statements, transaction records, wallet balances, acquisition invoices and records of the price used on the valuation date.

What if your crypto portfolio has both disclosed and undisclosed money?

This is where things can become complicated.

A taxpayer may have bought crypto over several years using different sources of money. Some purchases may have been made using salary or investment income that was already disclosed, while others may have been funded by income that was never reported.

Gupta says such a mixed portfolio cannot simply be treated as one undifferentiated asset for disclosure purposes. The taxpayer needs to segregate the holdings based on their source and tax history.

In practical terms, investors should try to establish:

·when each asset was acquired;

·how much was paid;

·which bank account or wallet funded the purchase;

·whether the underlying income was disclosed and taxed;

·whether the asset was later transferred or exchanged for another VDA; and

·what assets remain as of March 31, 2026.

This is one area where attempting to reconstruct the entire transaction history immediately before making a declaration could create problems if supporting records are missing.

What documents should crypto investors keep?

Crypto investors considering disclosure should build a clear audit trail before deciding how to proceed.

The records should, at a minimum, help establish ownership, acquisition cost, source of funds and valuation.

This could include exchange account statements, wallet addresses, transaction histories, bank statements, tax returns, invoices, records of crypto-to-crypto transactions and documents showing transfers between exchanges and wallets.

Sachdeva specifically recommends preserving sufficient documentation to establish ownership and the cost of acquisition.

For a taxpayer with a long crypto transaction history, this documentation exercise may be as important as calculating the amount payable under the scheme.

Does FAST-DS give immunity from further tax and prosecution?

A valid declaration can provide significant protection, but the protection is not unlimited.

Sachdeva says that where a FAST-DS 2026 declaration is valid and the prescribed amount has been paid, the taxpayer receives immunity from further tax, penalty and prosecution under the Black Money Act in respect of the foreign asset or income validly covered by the declaration.

However, the protection depends on the declaration satisfying the scheme's eligibility and procedural requirements.

It also does not automatically cover assets or income that were left out of the declaration.

More importantly for taxpayers holding overseas crypto, FAST-DS does not provide corresponding immunity under the Foreign Exchange Management Act (FEMA), according to Sachdeva.

Therefore, disclosure of an overseas asset under FAST-DS would not by itself protect a resident Indian from potential FEMA proceedings relating to the acquisition, holding or transfer of that asset.

This is an important distinction: tax disclosure and foreign-exchange compliance are not necessarily the same thing.

Therefore, investors with significant or complex overseas crypto holdings should consider taking professional tax advice before filing the declaration.