Comprehensive Guide to the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026: Amnesty and Compliance

The landscape of international taxation and cross-border compliance has witnessed a paradigm shift with the introduction of the Union Budget 2026. In a move designed to bridge the gap between strict enforcement and genuine error rectification, the government has unveiled the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (hereinafter referred to as "the Scheme").

This legislative development offers a strategic window for specific categories of assessees to regularize their tax standing regarding undisclosed foreign assets and income. It serves as an immunity mechanism against the rigorous provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Act).

This article provides an in-depth analysis of the Scheme, its legislative underpinnings, eligibility criteria, fee structures, and the procedural roadmap for compliance.

Legislative Framework and Statutory Basis

The legal architecture of the Scheme is embedded within Sections 114 to 128 of the Finance Bill, 2026. Unlike perpetual amnesty programs, this is a time-bound initiative.

  • Commencement: The Scheme will become operational from a date to be notified by the Central Government.
  • Closure: It will remain active until a "last date" is officially gazetted.
  • Regulatory Authority: The Central Board of Direct Taxes (CBDT) is empowered to issue guidelines, formulate rules, and prescribe necessary forms to ensure the Scheme's smooth administration. The CBDT also holds the authority to relax provisions if deemed necessary in the public interest.

The primary objective is to allow an assessee to come clean regarding assets or income located outside India that were previously not reported, thereby avoiding the severe penal consequences of the Black Money Act.

Applicability: Who Can Utilize the Scheme?

The Scheme is not open to all; it is specifically targeted at "small" assessees and those with technical reporting lapses. The eligibility criteria are strictly defined based on residential status under the Income-tax Act, 1961.

Eligible Assessees

  1. Residents: An individual who qualifies as a resident in India as per the provisions of Section 6 of the Income-tax Act, 1961.
  2. Past Residents: Individuals who are currently Non-Resident (NR) or Resident but Not Ordinarily Resident (RNOR), provided they were:
    • Resident in India during the financial year relevant to the undisclosed foreign income; or
    • Resident in India during the year in which the undisclosed foreign asset was acquired.

This inclusion of past residents is particularly beneficial for professionals who may have moved abroad or returned to India, ensuring that their past residency status does not preclude them from settling historical discrepancies.

Exclusions and Ineligibility

The legislature has carved out specific exclusions to prevent the misuse of this amnesty by serious offenders. The Scheme is not applicable in the following scenarios:

  • Proceeds of Crime: If the foreign asset or income is derived from proceeds of crime where proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002.
  • Completed Assessments: Cases where the tax authorities have already completed assessment proceedings under the Black Money Act.

Scope of Declarable Assets and Income

The Scheme allows for the declaration of two primary categories of undisclosed items: