Government Notifies Foreign Assets Disclosure Scheme for Small Taxpayers
The central government has notified a voluntary disclosure initiative titled the Foreign Assets of Small Taxpayers-Disclosure Scheme, aimed at encouraging individuals such as former non-resident students and professionals relocated to India to regularise overseas assets and income.
What Happened
Announced initially in the prior budget, the Foreign Assets of Small Taxpayers-Disclosure Scheme was formally notified by the government on Saturday. Under this measure, eligible taxpayers with undisclosed foreign assets and income can come clean by paying an effective tax rate of 60 percent, protecting them from prosecution and statutory penalties. The declaration window opens on Sunday, August 16, 2026, and closes on December 31, 2026. The Central Board of Direct Taxes (CBDT) and the Income Tax Department designated March 31, 2026, as the formal valuation date for calculating the market value of declared holdings.
Key Highlights
- Tax and Penalty Relief: Applicants can regularise non-disclosures by paying an effective tax of 60 percent, avoiding prosecution and additional penalties.
- Rs 1 Crore Ceiling for Untaxed Assets: For undisclosed foreign assets or foreign income that were not offered to tax in previous filings, the aggregate threshold is set at a maximum of Rs 1 crore.
- Rs 5 Crore Limit for Certain Holdings: For assets acquired while the taxpayer was a non-resident or assets already offered to tax but omitted from the tax return schedule, the declaration limit is set at Rs 5 crore, accompanied by a fee of Rs 1 lakh.
- Ownership Terms: The undisclosed asset or financial interest must be in the name of the declarant, including situations where the taxpayer serves as the beneficial owner.
- Two-Month Settlement Period: Taxpayers who receive an order from the tax authorities are granted a two-month timeframe to remit the required tax.
- Ineligible Categories: The framework explicitly excludes proceeds of crime and cases where assessment proceedings have already reached completion under the Black Money Act, 2015.
Why This Matters
The scheme is specifically tailored to assist individuals who lived abroad and missed mandatory reporting requirements upon returning or filing returns in India. According to an official, the policy addresses situations such as former students who forgot to report overseas bank account details. Tax partner Richa Sawhney from consulting firm Grant Thornton Bharat noted that while the scheme offers a simplified, one-time mechanism to regularise non-disclosures within defined monetary ceilings, taxpayers must act promptly because the declaration period between August 16, 2026, and December 31, 2026, represents a narrow window with no filings permitted afterwards.
What to Watch Next
Eligible individuals must assess their overseas assets against the March 31, 2026, valuation baseline before the December 31, 2026, deadline. Once declarations are processed, taxpayers receiving formal orders will need to complete their tax payments within the mandated two-month window.
Frequently Asked Questions
What is the tax rate applied under the Foreign Assets of Small Taxpayers-Disclosure Scheme?
Taxpayers who utilise the scheme will pay an effective tax rate of 60 percent on the declared assets, granting them immunity from prosecution and standard penalties.
What are the maximum asset values eligible for disclosure?
An aggregate limit of Rs 1 crore applies to overseas assets or income that were not previously taxed. A higher limit of Rs 5 crore, along with a Rs 1 lakh fee, applies to assets acquired while non-resident or already offered to tax but omitted from return reporting schedules.
Which assets or cases cannot be declared under the scheme?
The facility cannot be used for any assets that represent proceeds of crime, nor can it be accessed for cases where assessment proceedings under the Black Money Act, 2015, have already concluded.
Source: timesofindia.indiatimes.com