The Foreign Assets Disclosure Scheme, 2026: Two Doors, ₹1 Crore and ₹5 Crore, and a Date in December

There is a particular kind of client who goes quiet when foreign assets come up. Not a hoarder of secret wealth: a software engineer who held vested stock while on deputation in Seattle, an NRI who came home in 2019 with a Singapore savings account still open, a doctoral student who never closed a German brokerage account. The money was often taxed somewhere. Nobody filled in Schedule FA.

Until this year the law had one answer for all of them, and it was 120%. Now there is another, and it closes on 31 December 2026.

What the scheme is

Chapter IV of the Finance Act, 2026 created the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 — FADS, or FAST-DS in the department's own material. The rules and forms came in Notification No. 114/2026 of 14 August 2026, and the scheme opened on 16 August 2026.

It has two doors, and they are not alternatives you pick between. Which one you use depends on what happened.

Door one, for what was never taxed (serial 1 of the Table to section 133). An undisclosed foreign asset, or undisclosed foreign income. The cost is 30% tax plus a further 100% of that tax — 60%, all in. The condition: the undisclosed asset and income, taken together, must not exceed ₹1 crore.

Door two, for what was taxed but never declared (serial 2 of the same Table). An asset bought out of income earned while you were a non-resident, or out of income you had already offered to tax in India — and simply never entered in the return's schedule. The cost is a fee of ₹1,00,000. Flat. The condition: the asset's value must not exceed ₹5 crore.

Door two is the one most people in the opening paragraph need, and the one most of them do not know exists.

What it is worth, in one comparison

Under the Black Money Act, an undisclosed foreign asset is charged at 30% under section 3, and section 41 adds a penalty of three times the tax — ninety per cent more. One hundred and twenty per cent of the value, before prosecution. Separately, sections 42 and 43 impose ₹10 lakh penalties for not filing or for filing without the foreign-asset details, and prosecution sits behind both.

Against that: sixty per cent, or one lakh rupees.

Who cannot use it, and who wrongly thinks they cannot

The exclusions are two lines, and nothing more. Section 140 shuts out only:

• income or assets that are proceeds of crime with proceedings initiated or pending under the Prevention of Money-laundering Act, 2002; and
• income or assets for an assessment year where assessment under the Black Money Act is already complete.

That is the entire list. In particular, a pending proceeding does not bar you. Section 141 says so directly: where proceedings are pending, "the Assessing Officer shall take such declaration into account while finalising such assessment order".

You will read elsewhere that a search, a survey, or a notice arising from CRS or FATCA data disqualifies a declarant. That appears in no part of the Act or the Rules. The declaration's own verification asks you to certify one thing only: that section 140 is not attracted.

Eligibility is about amounts, not status. And the amounts are a cliff, not a slope: rule 4's own illustration takes assets of ₹6.5 crore against the ₹5 crore ceiling and concludes that "the assessee is not eligible to declare under this scheme". There is no proportionate relief for the part that fits.

The valuation rule that will surprise people

Everything is valued as on 31 March 2026, generally at the higher of cost and open-market price. For most assets that is unremarkable.

For a bank account it is not. Rule 3(1)(e) values the account at the sum of every deposit made into it since the day it was opened — not the balance, not the peak. Redeposits of your own withdrawals come out, and where an earlier declaration was made under the Black Money Act, only deposits since then count. A dormant account with a small balance and fifteen years of salary credits can still carry a value that breaks the ceiling.

One piece of comfort sits beside it. Under rule 5(2), if the value you declare differs from the Assessing Officer's, the declaration is not void for misrepresentation on that account alone — provided the variance is within 20% of the value you declared. Bank accounts are excluded from that shelter.

The four forms, and the clock between them

1. Form 1 — the declaration, filed electronically, by 31 December 2026, the last date fixed by rule 2(4). 2. Form 2 — the department's order stating what is payable, within one month from the end of the month in which you declared. 3. Payment — within two months from the end of the month in which you receive Form 2. Miss it and a further two months are available with simple interest at 1% for every month or part of a month. After that, nothing. 4. Form 3, intimating payment, and then Form 4, the certificate, within one month from the end of the month of intimation. Form 4 is "conclusive as to the matters stated therein".

A declaration filed on the last day therefore points at an order by the end of January 2027 and payment, without interest, by the end of March 2027.

Miss the payment and the notified Form 2 says what happens: the declaration "shall be treated as void and shall be deemed never to have been made". You would then have filed a signed account of an undisclosed foreign asset, kept no immunity, and — under section 138 — got none of the money back.

What immunity does and does not buy

Section 139 grants immunity "from the levy of any further tax or penalty and also from prosecution" — under the Black Money Act, for the previous year ending 31 March 2026 and earlier. Section 136 keeps the declared amount out of total income under both that Act and the Income-tax Act.

Read the limits as carefully as the grant:

• It is not a general amnesty. FEMA, the Prevention of Money-laundering Act and the Companies Act are untouched by Chapter IV.
• Nothing paid is refundable, and section 137 bars any rectification, revision, set-off or relief on the strength of what was declared.
• It stops at 31 March 2026. From FY 2026-27 the asset is ordinary law, and Schedule FA has to be filled in every year from then on. The scheme cures the past; it does not excuse the future.

A quieter change worth knowing

The Finance Act, 2026 also extended the ₹20 lakh threshold — below which the Black Money Act's penalty sections do not apply to assets other than immovable property — to the prosecution sections 49 and 50, and did it retrospectively from 1 October 2024. For a client with a modest overseas account, the criminal exposure that made these conversations so frightening may already have gone.

The scheme's own framing is unusually honest about who it is for: students, young professionals, people who moved home. The price of using it is one form. The price of missing 31 December is the arithmetic above.

Where this comes from

The Finance Act, 2026 (No. 4 of 2026), Chapter IV, sections 130 to 144, and the Foreign Assets of Small Taxpayers- Disclosure Scheme Rules, 2026 notified by Notification No. 114/2026 (G.S.R. 732(E)) of 14 August 2026, with Forms 1 to 4. The contrast figures are from the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015: section 3 (30%), section 41 (three times the tax), and sections 42 and 43 (₹10 lakh), read with section 160 of the Finance Act, 2026. One oddity for anyone reading the bare gazette: Chapter IV still carries the Bill's clause numbers in its internal cross-references, so a section that says "section 118" means section 134. CBDT's own rules use the enacted numbering, and so does this page.