Have undisclosed foreign assets or income? Know the extra tax cost if you miss FAST Scheme 2026's December 31 deadline

Income-tax Return (ITR) Forms 2 and 3 contain Schedule FA for reporting foreign assets, income and beneficial ownership. This schedule was introduced to address tax evasion and money laundering and has been part of the ITR forms since FY 2011-12 (AY 2012-13). In this schedule, individuals (ordinarily resident in India) must provide information about their foreign assets and income, regardless of whether the income is taxable in India. Failure to provide accurate information in Schedule FA can result in a penalty of Rs 10 lakh. Additionally, the individual may face imprisonment for six months to seven years, along with fines.

To provide amnesty to small taxpayers, the Budget 2026 introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (‘FAST Scheme’). This scheme, which came into force on 16th August 2026, provides a one-time voluntary disclosure window. A declaration can be filed under this scheme between 16th August and 31st December 2026, and no declaration can be filed after that date. For a taxpayer with a modest foreign bank account or an unreported overseas investment, this Scheme provides a last opportunity to avail immunity from penalty and prosecution for non-disclosure in Schedule FA in earlier years.

Who can declare, and who cannot

An assessee is eligible to file a declaration if he is resident in India in the relevant previous year. A person who was a non-resident, or resident but not ordinarily resident, in the relevant previous year is also eligible, provided he was resident in India either in the previous year to which the undisclosed foreign income relates or in the previous year in which the undisclosed asset outside India was acquired.


The declaration is available where the assessee has failed to furnish a return under Section 139 of the repealed Income-tax Act, 1961, or has filed a return before the commencement of the Scheme without disclosing the asset or the income.

However, this scheme is not available for the following categories.

• First, any income or asset which, directly or indirectly, represents proceeds of crime in respect of which proceedings have been initiated or are pending under the Prevention of Money-Laundering Act, 2002.
• Second, any income or asset relating to an assessment year for which assessment proceedings under the Black Money Act, 2015 have already been completed.
• Where the aggregate value of the undisclosed asset located outside India and the undisclosed foreign income exceeds Rs. 1 crore.
• Where the aggregate value of an asset outside India acquired either out of income earned while the assessee was a non-resident, or out of income already offered to tax, but not reported in the relevant Schedule of the return, exceeds Rs. 5 crore.

This scheme is particularly relevant to MNC employees who have received ESOPs or RSUs from foreign employers but failed to report them in the ITR Form.

How much tax is payable?

The small taxpayer must pay 30% tax on the value of the undisclosed asset as on 31st March 2026, and on the undisclosed foreign income, plus a penalty of 100% of that tax. There will be no surcharge or cess on the tax amount. Thus, the effective tax rate will be 60%. This option applies if the value of such undisclosed asset and income does not exceed Rs. 1 crore.

However, if the small taxpayer acquired an asset outside India either out of income earned while he was a non-resident, or out of income already offered to tax, but not reported in the relevant Schedule of the return, he will be liable to pay a flat fee of Rs. 1 lakh. This option applies if the value of such asset and income does not exceed Rs. 5 crores.

How does the valuation work?

The same valuation date of 31st March 2026 applies to every asset class. For most asset classes, including bullion, artistic work, immovable property, shares, securities, and any other asset, the fair market value is the higher of the cost of acquisition and the price the asset would ordinarily fetch in the open market on the valuation date.

Quoted shares and securities are valued at the higher of cost and the average of the lowest and highest quoted prices on an established securities market on the valuation date. Unquoted equity shares are valued on the book-value formula.

The rule for a foreign bank account is the one that will surprise most declarants. The account's value is not its balance on the valuation date. It is the sum of all deposits made in the account from the date of its opening until the valuation date, excluding only those deposits that were made out of the proceeds of an earlier withdrawal from the same account. For instance, the value of a foreign bank account opened in 2010, with deposits and withdrawals at multiple dates, will be computed as under.

DateDepositsWithdrawalsAmount counted towards value

Date	Deposits	Withdrawals	Amount counted towards value
01-04-2010	$ 1,000	-	$ 1,000
01-06-2011	$ 500	-	$ 500
01-08-2011	-	$ 700	-
01-04-2012	$ 500	-	Nil
01-08-2013	$ 500	-	$ 300
01-04-2019	$ 2,500	-	$ 2,500
01-06-2020	-	$ 400	-
01-09-2021	$ 1,000	-	$ 600
01-05-2024	-	$ 500	-
Total	$ 6,000	$ 1,600	$ 4,900

Conversion into Indian currency

The fair market value of an asset, determined in one of the permitted currencies designated by the RBI under the FEM (Deposit) Regulations, 2016, shall be converted into Indian currency as per the RBI's reference rate on 31st March 2026. Some of these rates are as under:

• INR 94.6543/USD
• INR 125.6347/GBP
• INR 109.0064/EUR
• INR 59.2500/JPY
• INR 25.7694/AED

Comparative analysis

The table below compares the two courses available to a taxpayer holding an undisclosed foreign asset: declare under the FAST Scheme before 31st December 2026 or do nothing and be assessed under the Black Money Act, 2015 when the asset comes to the notice of the Assessing Officer.

Particulars	Mr. A	Mr. B	Mr. C
FMV of undisclosed foreign asset as on 31st March 2026 [A]	60,00,000	40,00,000	75,00,000
Undisclosed foreign income of earlier years [B]	20,00,000	10,00,000	26,00,000
Aggregate value [C = A + B]	80,00,000	50,00,000	1,01,00,000
Eligible for the FAST Scheme (aggregate not exceeding Rs. 1 crore)	Yes	Yes	No

Option 1: Declaration under the FAST Scheme
Tax on the value of the undisclosed asset [D = A x 30%]	18,00,000	12,00,000	Not available
Tax on the undisclosed foreign income [E = B x 30%]	6,00,000	3,00,000	Not available
Total tax [F = D + E]	24,00,000	15,00,000	Not available
Penalty under the Scheme [G = F x 100%]	24,00,000	15,00,000	Not available
Total amount payable under the Scheme [H = F + G]	48,00,000	30,00,000	Not available

Option 2: No declaration, and the asset is later detected under the Black Money Act, 2015
Tax under Section 3 [I = C x 30%]	24,00,000	15,00,000	30,30,000
Penalty under Section 41 [J = I x 300%]	72,00,000	45,00,000	90,90,000
Penalty under Section 42/43 [K]	10,00,000	10,00,000	10,00,000
Total amount payable [L = I + J + K]	1,06,00,000	70,00,000	1,31,20,000
Exposure to prosecution under Section 50	Yes	Yes	Yes

Comparison
Effective outgo as a percentage of the aggregate value under Option 1 [H / C]	60.00%	60.00%	-
Effective outgo as a percentage of the aggregate value under Option 2 [L / C]	132.50%	140.00%	129.90%
Additional outgo if the declaration is not made [M = L - H]	58,00,000	40,00,000	-
Note: The computation assumes that the value of the asset detected under the Black Money Act, 2015 is the same as its value on 31st March 2026. Surcharge, cess and interest have not been considered, to simplify the illustration.

The procedure and the payment clock

The declaration is filed electronically in Form 1 with the documents evidencing the acquisition of the asset or the earning of the income, along with a valuation report wherever valuation is called for. The authorities then communicate the amount payable through an order in Form 2 within one month from the end of the month in which the declaration is made. The payment must follow within two months from the end of the month in which the order is received. A further period of up to two months is available, with simple interest at 1% for every month or part of a month of delay. Payment beyond that extended period will make the taxpayer ineligible for the scheme.

Once payment is made, the declarant intimates the details electronically in Form 3 with proof of payment, and the authority issues a final order in Form 4 within one month from the end of the month in which the intimation is received. That order is conclusive as to the matters stated in it.

What the immunity covers, and what it does not

A declarant who files a valid declaration and pays within the specified period is granted immunity from any further tax or penalty and from prosecution under the Black Money Act, 2015 in respect of the declared income or asset, for the previous year ending on 31st March 2026 or any earlier previous year. The declared income, and the amount of investment in the declared asset, are not to be included in the total income of the declarant for any assessment year under the repealed Income-tax Act, 1961 or under the Black Money Act, 2015. Where assessment proceedings under either enactment are pending in respect of the same income or asset, the Assessing Officer is required to take the declaration into account while finalising the assessment.