Taxpayers Get One-Time Disclosure
Key Highlights:
- One-time foreign asset disclosure window opens on August 16, 2026.
- Taxpayers can submit declarations until December 31, 2026.
- Assets or income up to ₹1 crore attract an effective 60% tax outgo.
- A separate category covers foreign assets up to ₹5 crore for a ₹1 lakh fee.
- Assets will be valued as of March 31, 2026.
- Declarations must be filed electronically through Form 1.
- The scheme covers specified undisclosed foreign assets and foreign income.
- Certain non-residents and RNOR taxpayers can also qualify.
New Delhi, August 15: The government will open a one-time disclosure window from August 16, 2026, allowing eligible small taxpayers to declare specified undisclosed foreign assets and foreign income under the Foreign Assets of Small Taxpayers–Disclosure Scheme, 2026.
Operationalised by the Central Board of Direct Taxes (CBDT), the scheme was announced in the Union Budget 2026-27 and notified under Chapter IV of the Finance Act, 2026. The disclosure window will remain open until December 31, 2026.
The scheme covers undisclosed assets located outside India, including financial interests in foreign entities, as well as foreign income that was chargeable to tax in India but was not disclosed.
Two categories of disclosure
The scheme provides for two separate categories of declarations.
Under the first category, taxpayers can disclose foreign assets or income with an aggregate value of up to ₹1 crore. They will have to pay tax at 30 per cent along with an additional levy equal to the tax, taking the total outgo to 60 per cent.
The tax and additional levy apply to both the value of the asset and the income accrued from it.
For instance, the CBDT said that if an undisclosed foreign bank account is valued at ₹60 lakh and undisclosed foreign income amounts to ₹20 lakh, the total amount payable would be ₹48 lakh. This includes ₹24 lakh in tax and an additional ₹24 lakh levy.
The second category covers foreign assets worth up to ₹5 crore that were acquired from income that had already been offered to tax, or were acquired when the taxpayer was a non-resident but were not disclosed in the relevant income-tax return.
A flat fee of ₹1 lakh will apply to declarations under this category. Foreign assets exceeding ₹5 crore will not qualify under this provision, according to the CBDT’s FAQs.
Foreign asset valuation
The valuation date for assets covered under the scheme is March 31, 2026.
As a general rule, the fair market value will be the higher of the asset’s acquisition cost and the price it would ordinarily fetch in the open market on the valuation date.
The CBDT has also prescribed specific valuation methods for different types of foreign assets, including bank accounts, jewellery, property, listed securities and unlisted securities.
For foreign bank accounts, valuation will generally be based on the sum of deposits made into the account from the date of opening until the valuation date, subject to specified exclusions.
The rules also contain provisions to prevent the same funds from being counted twice where withdrawals are subsequently redeposited or used to purchase another asset.
Online declaration process
Eligible taxpayers will have to submit their declaration electronically through Form 1. The entire process will be administered online by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as applicable.
The scheme is available to residents as well as certain non-residents and resident but not ordinarily resident (RNOR) taxpayers, subject to the prescribed conditions.
A person who is currently a non-resident can also make a declaration if they were resident in India during the year to which the undisclosed income relates or in the year in which the undisclosed foreign asset was acquired.
The government has introduced the scheme as a limited opportunity for eligible taxpayers to bring specified overseas assets and income into compliance with India’s tax framework. The disclosure window will remain available for taxpayers until December 31, 2026.
