Foreign assets disclosure window for small taxpayers closes 31 December 2026
If you studied abroad, worked on a foreign assignment, or moved back to India and still have a bank account, shares or property overseas that you never reported, one government window is open for a few more weeks. It is called the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, or FADS 2026, and the declaration period ends on 31 December 2026. This post explains the scheme in plain English using the Income Tax Department's own pages. It is not tax advice, and the details of your case matter, so please read to the end.
What the department says
The Union Budget 2026-27 summary on the Press Information Bureau site said a one-time six-month foreign asset disclosure scheme would be introduced for students, young professionals, tech employees, relocated NRIs and others who need to disclose income or assets below a certain size. The Income Tax Department's user manual for Form 1 now describes the scheme as introduced through the Finance Act, 2026, and says the declaration timeline runs from 16 August 2026 to 31 December 2026. The department's news page also records that the rules and forms under the scheme were notified on 1 September 2026.
According to the user manual, the scheme applies to a person who was resident in India in the relevant year, and also to some people who are now non-resident or resident but not ordinarily resident but were resident when the income arose or the asset was acquired. A valid declaration and payment gives immunity from further tax, penalty and prosecution under the Black Money Act, 2015, subject to the prescribed conditions.
What it costs: two categories
The manual lists two categories in Form 1.
Category 1 covers an undisclosed foreign asset or undisclosed foreign income where the combined value does not exceed Rs 1 crore. The amount payable is 30% of the value as tax, plus an amount equal to that tax. So the total is 60% of the declared value.
Category 2 covers an asset abroad that was bought from income earned abroad while you were a non-resident, or from income already offered to tax in India, but which was not reported in the foreign asset schedule of the return. The combined value must not exceed Rs 5 crore, and the amount payable is a flat fee of Rs 1 lakh.
A worked example with round numbers
Suppose, only as an illustration, that a person declares an undisclosed overseas asset worth Rs 50,00,000 under category 1. Tax at 30% is Rs 15,00,000. An equal amount of Rs 15,00,000 is added. The total payable is Rs 30,00,000, which is 60% of Rs 50,00,000. At the category 1 ceiling of Rs 1,00,00,000 the total would be Rs 60,00,000. In category 2 a person who qualifies under category 2, with assets up to Rs 5 crore, pays the flat fee of Rs 1,00,000 instead. We checked these figures with a calculation, and they match the manual's own statement that the amount in Part D is 60% of the category 1 value.
The steps and the dates
The process has four forms. You file Form 1 on the e-filing portal between 16 August and 31 December 2026. The department then issues Form 2 with the amount payable within one month from the end of the month of filing. You pay and file Form 3 within four months from the end of the month Form 2 is issued, and the department closes the matter with Form 4. You need a valid PAN, details and fair market value of each asset, any supporting documents, and an e-verification method such as Aadhaar OTP.
What to do first
Do not rush into a form because of a deadline. First list what you hold abroad and when you acquired it. Check your past returns for the foreign asset schedule. Because immunity depends on conditions in the law, talk to a chartered accountant before you file. If you have nothing undisclosed, this scheme is not meant for you.
Gunaka's calculators help with planning, but they cannot decide a tax disclosure. Results are estimates, not financial advice.
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