The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 opened on August 16 and will remain available until December 31, 2026.
It provides a one-time route for eligible taxpayers to disclose specified foreign assets and income, subject to prescribed conditions.
What is the ₹20 lakh rule?
Ved Jain, advocate and former president of the Institute of Chartered Accountants of India (ICAI), noted in an analysis published on Taxsutra on August 17 that the Black Money Act does not impose a penalty in certain cases involving foreign assets other than immovable property, where the aggregate value does not exceed ₹20 lakh.
The ₹20 lakh threshold was introduced through changes made by the Finance (No. 2) Act, 2024, effective October 1, 2024.
The Budget 2026 has proposed to additionally provide immunity from prosecution for such cases, with retrospective effect from October 1, 2024.
This can be relevant to taxpayers whose foreign asset was acquired from a legitimate source and whose underlying income was properly accounted for, but who inadvertently omitted the asset from the Foreign Assets (Schedule FA) section of their income-tax return.
Such taxpayers may therefore need to first determine whether the ₹20 lakh provision applies to their case before deciding whether to make a declaration under FAST-DS, according to Jain’s analysis.
How does FAST-DS work?
The scheme broadly covers two categories.
The first covers undisclosed foreign assets or foreign income that was not offered to tax in India. The aggregate value of the relevant undisclosed income and foreign assets must not exceed ₹1 crore. The amount payable comprises 30% tax and an additional amount equal to the tax, effectively 60% of the declared amount, subject to the scheme’s conditions.
The second category covers certain foreign assets where the income used to acquire the asset was offered to tax in India, or where the asset was acquired from income accruing or arising outside India while the taxpayer was a non-resident and was not declared after the taxpayer became a resident. The value of the eligible asset must not exceed ₹5 crore, and the scheme provides for a ₹1 lakh fee.
The distinction is important because a taxpayer who has merely missed reporting an asset in Schedule FA can be in a different position from someone whose foreign income or the source of a foreign asset was not disclosed or taxed.
Who should examine the ₹20 lakh provision?
The provision could be relevant to taxpayers holding certain non-immovable foreign assets whose aggregate value does not exceed ₹20 lakh.
However, the ₹20 lakh threshold is not a blanket exemption for all foreign assets. It does not cover foreign immovable property.
Taxpayers therefore need to consider the type of asset, its aggregate value and whether the underlying income or source was properly accounted for.
The Income Tax Department’s current ITR guidance also requires eligible taxpayers to report foreign assets and foreign-source income in the relevant schedules. Schedule FA is used to provide details of foreign assets or income from sources outside India.
What should taxpayers check?
Before filing a FAST-DS declaration, taxpayers with an omitted foreign asset should establish whether:
- the source of the asset was properly explained and accounted for;
- the underlying income was offered to tax where required;
- the asset falls within the scope of the ₹20 lakh provision;
- the asset is movable or immovable;
- the asset meets FAST-DS’s applicable value threshold; and
- all other conditions under the scheme are satisfied.
Jain’s analysis also notes that taxpayers should continue to report such foreign assets in subsequent income-tax returns where disclosure is required, even where the ₹20 lakh provision applies.
The FAST-DS window will remain open until December 31, 2026. The scheme was notified by the Central Board of Direct Taxes on August 14 and came into force on August 16.
