Foreign Assets Disclosure Scheme 2026: Window Closes December 31
The CBDT's Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 gives eligible taxpayers a one-time window until December 31, 2026 to regularise undisclosed foreign assets. Missing the deadline means facing the full Black Money Act machinery, including a 90% penalty and possible prosecution.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Finance Act, 2026 and CBDT Notification No. 114/2026 [F. No. 370142/18/2026-TPL] issued under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 — Effective: August 16, 2026. Source: CBDT notification. Last reviewed by CA Harun Raaj: September 2026.
If you hold an undisclosed foreign bank account, property, or securities, a one-time government window is open until December 31, 2026. The Central Board of Direct Taxes has notified the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FASDS 2026), letting eligible taxpayers declare undisclosed foreign assets, pay a settled charge, and close the file. Once this window shuts, the only route left is the full legal machinery of the Black Money Act, 2015 — a 90% penalty on undisclosed asset value under Section 41 of that Act, on top of tax, and the possibility of criminal prosecution.
This article sets out who can use the scheme, what it costs, and what protection a valid declaration provides. The scheme rules, as notified, state that the December 31, 2026 date will not be extended.
What is the Foreign Assets Disclosure Scheme, 2026?
FASDS 2026 is a one-time voluntary disclosure window that lets eligible taxpayers declare undisclosed foreign assets and income, pay a settled charge, and receive immunity from further proceedings under the Black Money Act, 2015. It operates under the Finance Act, 2026 and CBDT Notification No. 114/2026 dated August 14, 2026, effective August 16, 2026.
The scheme prescribes four forms: Form 1 (electronic declaration), Form 2 (notice to declarant), Form 3 (payment challan), and Form 4 (certificate of confirmation).
Covered assets include foreign bank accounts, immovable property outside India, jewellery, artistic works, shares and securities, insurance policies, and any partnership or financial interest in a foreign entity, as defined in Section 2(l) of the Black Money Act, 2015.
Who is eligible?
The scheme targets "small taxpayers" whose undisclosed or unreported foreign assets fall within two defined caps.
The residency test applies at the time the income arose or the asset was acquired — not at the time of declaration. A non-resident or RNOR filing the declaration today can still qualify if they were resident in India when the asset was acquired.
The scheme is not available where assessment proceedings under the Black Money Act have already been completed, where the assets or income represent proceeds of crime under the Prevention of Money Laundering Act, 2002, or where a prior declaration has already been made under this scheme for the same assets.
What does it cost?
Category 1 — undisclosed foreign assets (up to ₹1 crore). The charge comprises 30% tax on the fair market value of the asset as on March 31, 2026, plus an additional charge equal to the tax amount — a total outgo of 60% of the March 31, 2026 fair market value.
Illustrative example: a Delhi-based business owner holds a UAE bank account equivalent to ₹80 lakh as on March 31, 2026, never disclosed in any ITR. Under Category 1, the total payment works out to 60% of ₹80 lakh, or ₹48 lakh, and this closes all Black Money Act proceedings on that account. Compare this to detection by the tax department: 30% tax (₹24 lakh) plus a 90% penalty (₹72 lakh) totals ₹96 lakh, with the additional risk of prosecution under Sections 50 and 51 of the Black Money Act.
Category 2 — specified foreign assets (up to ₹5 crore). The charge is a flat ₹1,00,000, regardless of asset value, provided the aggregate does not exceed ₹5 crore. This category is built for assets acquired from legitimate, already-taxed income that was simply omitted from Schedule FA of the ITR.
Illustrative example: a Hyderabad-based IT professional who worked in the US from 2017 to 2021 holds a US brokerage account worth ₹2.5 crore (FMV March 31, 2026), funded from US salary already taxed there. She filed her Indian ITR every year but omitted Schedule FA. Under Category 2, the flat fee of ₹1,00,000 secures full immunity from Black Money Act proceedings.
These examples are illustrative only. Category determination depends on the specific facts of each case.
Key point: FASDS 2026 lets eligible small taxpayers close out undisclosed foreign assets for 60% of asset value or a flat ₹1,00,000 fee, against a 90% penalty plus tax if the same assets are later detected by the tax department.
What immunity does a valid declaration provide?
A valid declaration under FASDS 2026 protects the declarant in the following ways:
- No further tax, interest, or penalty is chargeable under the Black Money Act on the declared assets.
- No prosecution can be initiated under Sections 50 and 51 of the Black Money Act on the declared assets.
- Information disclosed in the declaration cannot be used as evidence against the declarant in other legal proceedings.
The scheme also has limits worth flagging before you file:
- Amounts paid under the scheme are not open to rectification, revision, set-off, or appeal.
- FASDS 2026 does not settle FEMA contraventions; a separate FEMA compounding application under the Foreign Exchange (Compounding Proceedings) Rules, 2024 (MD 04/2025-26) may still be required for the same asset.
- PMLA proceedings continue unaffected if the underlying asset represents proceeds of crime.
What to do now
- Pull your ITRs for FY 2015-16 to FY 2024-25 and check Schedule FA in each return for completeness.
- List every foreign account, property, and investment held at any point during those years.
- Work out the aggregate fair market value of any unreported assets as on March 31, 2026.
- Identify whether the facts point to Category 1 or Category 2 based on asset type and value.
- Have your FEMA compounding exposure assessed separately, since FASDS 2026 does not cover it.
- File Form 1 electronically and complete payment through Form 3 well before December 31, 2026.
I'm CA Harun Raaj, Visakhapatnam. If you have foreign assets that may need regularising under FASDS 2026, reach out before the December 31, 2026 window closes.
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See Also
Frequently Asked Questions
Who qualifies as a 'small taxpayer' under FASDS 2026?
Category 1 covers taxpayers with undisclosed foreign assets or income never offered to tax in India, aggregating up to ₹1 crore FMV as on March 31, 2026. Category 2 covers foreign assets acquired from already-taxed or non-resident income that was omitted from Schedule FA, aggregating up to ₹5 crore.
What happens if I miss the December 31, 2026 deadline?
The scheme's rules state the deadline will not be extended. After it closes, undisclosed assets fall under the full Black Money Act, 2015 machinery, meaning 30% tax plus a 90% penalty under Section 41, and possible prosecution under Sections 50 and 51.
Can an NRI use FASDS 2026 for assets acquired while resident in India?
Yes, potentially. Eligibility is tested by residency at the time the income arose or the asset was acquired, not at the time of declaration, so a current non-resident or RNOR who was resident when the asset was acquired can still qualify.
I disclosed assets under the 2015 one-time compliance window — can I use FASDS 2026 too?
Yes, provided the assets being declared now are different from those already disclosed under the 2015 window. The two schemes cover separate asset declarations, and FASDS 2026 does not allow a repeat declaration for the same assets.
Does FASDS 2026 settle FEMA violations linked to the same foreign asset?
No. FASDS 2026 provides immunity only under the Black Money Act, 2015. FEMA contraventions on the same asset may still need a separate compounding application under the Foreign Exchange (Compounding Proceedings) Rules, 2024 (MD 04/2025-26).
What is the difference between a Category 1 and Category 2 declaration?
Category 1 is for genuinely undisclosed foreign assets or income never taxed in India, charged at 60% of the March 31, 2026 fair market value. Category 2 is for assets funded from already-taxed income that was simply left out of Schedule FA, charged at a flat ₹1,00,000 fee.
Which forms are needed to make a declaration under the scheme?
The notified forms are Form 1 for the electronic declaration, Form 2 as the notice to the declarant, Form 3 for the payment challan, and Form 4 as the certificate of confirmation once the declaration is accepted.
Is criminal prosecution still possible after a valid FASDS 2026 declaration?
No, a valid declaration protects against prosecution under Sections 50 and 51 of the Black Money Act for the declared assets. However, PMLA proceedings remain unaffected if the asset represents proceeds of crime.
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