One time undisclosed foreign income disclosure scheme announced in Budget 2026 for these taxpayers

The Finance Minister in Budget 2026 has announced a one-time foreign asset disclosure scheme to address practical issues of small taxpayers like students, young professionals, tech employees, relocated NRIs and such others.

In order to facilitate voluntary compliance, a one-time six-month foreign asset disclosure scheme has been proposed for these taxpayers to disclose income or assets below a certain monetary limit.

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This scheme would be applicable for two categories of taxpayers, namely,

Category (A): Individuals who did not disclose their overseas income or assets.

• Limit: Sum total of Undisclosed income and assets does not exceed Rs 1 crore.
• Immunity upon payment of Tax and Penalty: 30% of the Fair Market Value of the asset or 30% of undisclosed income as tax and 30% as additional income tax in lieu of penalty to get immunity from prosecution.

Category (B): Individuals who disclosed their overseas income and/or paid due tax but did not declare the acquired asset.

• Limit: Asset value up to Rs 5 crore.
• Immunity: Available from both penalty and prosecution upon payment of a fee of Rs 1 lakh.

"This is a welcome move for small taxpayers who inadvertently omitted to report foreign income and assets. Such taxpayers will be protected from penalty and prosecution upon payment of additional tax or applicable fee. This will work well both for the small taxpayers who will get a chance to correct their reporting compliance and also for the tax authorities who will collect the required taxes without investing time in lengthy assessments," says Shalini Jain, Tax-Partner, EY India.

Foreign Assets of Small Taxpayers - Disclosure Scheme, 2026 (FAST-DS 2026)

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was enacted to address the issue of undisclosed foreign income and assets held by resident taxpayers. At the time of its introduction, a one-time compliance window was provided from 1 July 2015 to 30 September 2015 to enable voluntary declaration of undisclosed foreign assets acquired up to 31 March 2015, subject to payment of tax and penalty.

It has been observed that non-compliance is particularly prevalent in cases involving legacy or inadvertent non-disclosures for small taxpayers, including holdings arising from foreign employment benefits such as ESOPs or RSUs, dormant or low-value foreign bank accounts of former students, savings or insurance policies of returning non-residents, and assets held by individuals on overseas deputation. Further, information received under the Automatic Exchange of Information framework indicates non-disclosure of foreign financial assets by a significant number of PAN holders.

In order to facilitate voluntary compliance and enable resolution of such legacy cases of small taxpayers, it is proposed to introduce a time-bound scheme for declaration of foreign assets and foreign-sourced income, with payment of tax or fee based on the nature and source of acquisition and grant of limited immunity from penalty and prosecution under the Black Money Act in respect of matters covered by the declaration. Cases involving prosecution or proceeds of crime are proposed to be excluded.

The proposed scheme shall form part of the Finance Bill, 2026 and shall come into force from the date to be notified by the Central Government.

Akhil Chandna, Partner and Global People Solutions Leader, Grant Thornton Bharat, said: “The foreign asset disclosure scheme announced in Budget 2026 represents a pragmatic step toward strengthening tax transparency. By offering a one‑time, six‑month window, the Government enables specified taxpayers—including students and individuals with past non‑disclosures—to regularise disclosure & reporting of overseas income and assets. With thresholds of ₹1 crore for complete non‑disclosure and ₹5 crore for cases where income was reported but foreign assets were not, the scheme provides a structured mechanism to take corrective steps."

Chandna says:

• Granting immunity from Prosecution in cases of non-disclosure of non‑immovable foreign assets below ₹20 lakh, retrospectively from 1 October 2024, further reinforces Government’s focus on simplifying compliances for small taxpayers.
• This initiative enables students and select taxpayers tovoluntarily correct past positions and move toward transparent financial reporting.
• Eligible individuals should review past filings and consider voluntary disclosure within the window to ensure long‑term compliance and avoid implications such as penalty and prosecution.