Scheme note · 2026-09-27 · By CA Arun Mehta
Undeclared Foreign Assets? The FAST-DS 2026 Window Closes on 31 December
FAST-DS 2026 lets an individual regularise unreported foreign assets and foreign income by 31 December 2026, paying 60% of value where the income was never taxed in India, or a flat ₹1 lakh where tax was paid and only the Schedule FA reporting was missed.
The Finance Act, 2026 has opened a one-time window, from 16 August 2026 to 31 December 2026, for individuals to regularise foreign assets and foreign income that were never reported in their Indian returns. A valid declaration carries immunity from further tax, penalty and prosecution under the Black Money Act for years up to 31 March 2026.
Most of the people this is aimed at are not evaders. They are salaried employees holding RSUs in a foreign parent, professionals who came home and left a bank account open behind them, and families who inherited a small flat overseas.
Why this matters now
Every resident and ordinarily resident taxpayer has to report foreign bank accounts, shares, property and other overseas interests in Schedule FA of the return, even where no foreign income arises. Since 2015, leaving a foreign asset out has attracted the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act: tax at 30%, a penalty of three times that tax, a further ₹10 lakh penalty for each year the asset went unreported, and prosecution.
Against that, FAST-DS 2026 is a proportionate way to put the record right, and for one of the two categories it is close to nominal.
Is this relevant to you?
Review your position if any of these applies to any year up to 31 March 2026.
- You hold, or held, shares, RSUs or ESOPs of a foreign company — typically through an employer's overseas brokerage account — and did not report them in Schedule FA.
- You returned to India after working abroad and kept a foreign bank account, pension account, flat or investment that went unreported once you became resident.
- You have a foreign bank account opened for education, travel or family remittances that was never reported.
- You earned foreign interest, dividend or rental income that was not included in your Indian return.
- You are an NRI now, but the asset was acquired, or the income earned, while you were resident in India.
What it costs
There are two categories, and which one applies turns on evidence rather than on preference.
| Category 1 | Category 2 | |
|---|---|---|
| Who it is for | Foreign income never taxed in India, or foreign assets whose source cannot be explained | Foreign assets bought from income already taxed in India, or earned while non-resident, but not reported in Schedule FA |
| Amount payable | 30% tax, plus an additional amount equal to that tax — 60% of value in effect | Flat fee of ₹1 lakh |
| Value limit | Assets and income together up to ₹1 crore | Value of assets up to ₹5 crore |
| Valuation date | 31 March 2026 | 31 March 2026 |
An account valued at ₹60 lakh plus unreported income of ₹20 lakh is an aggregate of ₹80 lakh, so ₹48 lakh is payable under Category 1. The same facts under the Black Money Act could cost ₹96 lakh before the per-year penalty, with prosecution alongside it.
A returning professional with an unreported ₹2.4 crore flat abroad, bought out of overseas salary, pays ₹1 lakh under Category 2 — against a ₹10 lakh penalty for every year it went unreported.
Our FAST-DS 2026 calculator works both of these out on your own figures, including the ceiling tests and the payment dates. It runs in your browser: nothing you enter is sent anywhere.
The points that catch people out
- A bank account is valued at total deposits since opening, not at today's balance. An account with almost nothing in it can still carry years of deposits, and that total is what is tested against the ₹1 crore ceiling. This is the single assumption that most often pushes a declaration out of Category 1.
- Other assets are valued at the higher of cost and market value as on 31 March 2026. Property, jewellery and unlisted holdings need a recognised valuer's report.
- The ceiling test is all-or-nothing. The Scheme does not allow a part-declaration trimmed to fit inside a limit, and a declaration carrying a false material particular is invalid.
- What is paid is not refundable, and no relief can be claimed later, in any assessment or appeal, for the items declared.
- Payment deadlines are strict: within two months after the Department's order, or a further two months with interest at 1% per month. Pay after that and the benefit is lost.
- The Scheme does not cover future years. From Tax Year 2026-27, foreign assets must be reported correctly under the Income-tax Act, 2025.
It is also not available for proceeds of crime under the Prevention of Money-laundering Act, 2002, or for years already assessed under the Black Money Act.
How the process runs
- Diagnosis — list every foreign asset and every foreign income item, year by year, and fix residential status for each of those years.
- Classification — decide, on evidence, whether each item is Category 1 or Category 2.
- Valuation — value each asset as on 31 March 2026 under the prescribed Rules, using RBI reference rates and valuer reports where they are needed.
- Declaration — file Form 1 electronically on or before 31 December 2026.
- Payment — receive the order in Form 2, pay within the time allowed, and file proof in Form 3.
- Closure — obtain the certificate in Form 4, and set up correct Schedule FA reporting going forward.
What to have ready
- Passport stamps or travel records establishing residential status for each year.
- Complete foreign bank statements from the date of opening, not merely recent ones.
- Brokerage statements, RSU and ESOP grant and vesting records, and Form 16 or Form 12BA showing tax deducted on perquisites.
- Purchase deeds, payment proofs and valuation reports for property and other physical assets.
- Copies of the returns filed for the relevant years.
Our view
Where the only lapse was not reporting a foreign asset in Schedule FA, Category 2 closes a serious legal exposure for ₹1 lakh. That is an easy decision on most facts.
Category 1 is not. It costs 60% of value, it is irreversible, and the ₹1 crore ceiling is measured on a definition of value — deposits since opening — that is wider than most people expect. It deserves a proper computation before anything is filed.
Either way, start early. Gathering statements going back years, obtaining valuations and assembling residency evidence takes longer than the filing, and the window does not move.
References
- Finance Act, 2026 (Act No. 4 of 2026), Chapter IV, sections 130 to 144.
- CBDT Notification No. 114/2026 dated 14 August 2026 — Foreign Assets of Small Taxpayers (Disclosure) Scheme Rules, 2026.
- CBDT, Frequently Asked Questions on FAST-DS, 2026, dated 13 August 2026.
- Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Our work on residential status, DTAA positions and remittance is set out under international taxation.
General information on a scheme of limited duration, not advice on a particular matter. Whether the Scheme is available, and which category applies, depends on facts and on evidence. Take advice before filing.
Questions this answers
- What does a declaration under FAST-DS 2026 cost?
- It depends on which of two categories the facts fall in. Where foreign income was never taxed in India, or the source of a foreign asset cannot be explained, the charge is tax at 30% plus an additional amount equal to that tax — 60% of value in effect — and the aggregate of assets and income must not exceed ₹1 crore. Where the asset was bought from income already taxed in India, or earned while non-resident, and only the Schedule FA reporting was missed, the charge is a flat fee of ₹1 lakh and the value of assets must not exceed ₹5 crore.
- How is a foreign bank account valued under FAST-DS 2026?
- At the total of all deposits made into the account from the date it was opened up to 31 March 2026, not at the closing balance. An account holding very little today can still carry a large value under the Scheme if money has moved through it over many years, and that figure is what is tested against the ₹1 crore ceiling.
- Can someone who is now an NRI use FAST-DS 2026?
- Yes, where the undisclosed asset was acquired or the income earned while the person was resident in India. Residential status has to be established year by year, because it determines both whether the Schedule FA obligation applied in a given year and which category the item falls in.
More practice notes
- Share Capital and Unsecured Loans Under Section 68: What the Onus Actually RequiresTwo Supreme Court decisions are cited against each other on share capital additions, and both are still live. What decided the appeals in 2026 was something else.
- The Officer Says Your Deposit Is Unexplained. What Actually Decides the AppealDocuments alone do not settle an addition for an unexplained credit. Here is what the Tribunal actually weighed in orders passed this year, and what it means for your reply.
- Sumati Dayal v. CIT: The Test of Human Probabilities, and Its LimitsThe Supreme Court decision behind most additions for unexplained credits, what it does not authorise, and how the Tribunal is applying it in 2026.
An account abroad you have not reported?
The window closes on 31 December 2026, and the work that comes before the filing takes longer than the filing does: statements from the date each account was opened, residency evidence for every year, a valuer report where the asset is property. A call settles which category your facts fall in before anything is committed to Form 1.
NRI Tax & Repatriation Call — 45 minutes, ₹7,500 + gst. A written note after the call setting out the position taken, the forms required, and the order to file them in.