Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026: Detailed FAQs and Practical Guide

The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 is a special one‑time opportunity for eligible assessees to regularise certain undisclosed foreign assets and foreign income, with limited tax cost and defined immunity. The Scheme is contained in Chapter IV (sections 130 to 144) of the Finance Act, 2026, and is operational alongside the Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026.

This guide restructures the original FAQs into a more practical, user‑oriented format while retaining all legal references exactly as notified.

A. Scheme Basics – What, When, Who Administers

Nature and legal framework of the Scheme

The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 is a one‑time voluntary disclosure window. It allows an assessee, who satisfies the prescribed eligibility conditions, to come forward and declare:

specified undisclosed foreign assets,
specified undisclosed foreign income, or
specified foreign assets that were not shown in the appropriate schedules of the income‑tax return,

on payment of a stipulated tax or a flat fee, depending on the category of declaration.

The Scheme is embedded in:

Chapter IV (sections 130 to 144) of the Finance Act, 2026, and
the Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026 framed thereunder.

Commencement and critical dates

Date of commencement: The Scheme becomes effective from 16 August 2026.
Last date for filing declaration: Declarations can be made up to 31 December 2026 only. No declarations are permissible thereafter.
Valuation date: For all assets covered by the Scheme, 31 March 2026 is the valuation date. The fair market value (FMV) of relevant foreign assets is to be computed as on this date.

Income‑tax authority in charge

The Scheme is centrally administered in an electronic mode. The “income‑tax authority” for this purpose is:

the Principal Director General of Income‑tax (Systems), or
the Director General of Income‑tax (Systems),
as the case may be.

All interactions—filing of declarations, orders, payment intimations and confirmations—are to be done online through the prescribed forms.

B. Eligibility – Who Can File a Declaration

Definition of “assessee” for the Scheme

For the purposes of this Scheme, an “assessee” who can validly file a declaration is:

A resident in India in the relevant previous year, as determined under section 6 of the Income Tax Act 1961; or
A person who is a non‑resident or resident but not ordinarily resident (RNOR) in the relevant previous year [as per section 6(6) of the Income Tax Act 1961], but who:
- was resident in India in the previous year to which the undisclosed foreign income under section 4 of the Black Money Act, 2015 relates, or
- was resident in India in the previous year when the undisclosed foreign asset located outside India was acquired.

Present non‑residents and RNORs

An individual who currently qualifies as non‑resident can still use the Scheme if he/she had the status of resident in India in either:
- the year in which the relevant undisclosed foreign income arose, or
- the year in which the relevant undisclosed foreign asset was acquired.
The Scheme expressly includes RNORs, subject to the above link‑back conditions of residence. The declarant is required to state the residential status for the concerned previous year in Form 1.

Conditions relating to past compliance

A declaration under the Scheme is possible where the assessee has, in relation to the foreign asset or foreign income:

not filed a return under section 139 of the Income Tax Act 1961, or
filed a return before the Scheme commenced but did not disclose the concerned asset or income, or
where the item has escaped assessment within the meaning of section 147 of the Income Tax Act 1961.

Time window for filing

Declarations can be filed:

on or after 16 August 2026, and
on or before 31 December 2026.

Any declaration outside this time frame is not admissible.

Coverage of previous years

A declaration may relate to any previous year that is covered by the Table in section 133, subject to:

the monetary caps prescribed for each category, and
all other conditions of the Scheme.

C. Scope of Declaration – What Can Be Declared

Broad categories of declarations under `section 133`

The Scheme distinguishes between two principal categories (as per the Table in section 133):

Category 1 – Undisclosed foreign assets or undisclosed foreign income
(Section 133 – Table: Sl. No. 1)
- Undisclosed asset located outside India, and/or
- Undisclosed foreign income that has not been offered to tax in India.
Category 2 – Foreign assets not properly disclosed in return
(Section 133 – Table: Sl. No. 2)
- Assets located outside India which were either:
  - already offered to tax in India, or
  - acquired when the assessee was a non‑resident,
    but which were not reported in the relevant Schedule of the income‑tax return.

Meaning of “undisclosed asset located outside India”

An “undisclosed asset located outside India” refers to:

any asset (including a financial interest in any entity) located outside India,
held in the assessee’s own name or as a beneficial owner,
where:
the assessee has no explanation about the source of investment, or
the explanation given is considered unsatisfactory by the Assessing Officer.

Meaning of “undisclosed foreign income”

“Undisclosed foreign income” denotes:

income derived from a source outside India,
which was chargeable to tax in India, but
was not offered to tax in any return or assessment process.

Monetary thresholds

For Category 1 (Section 133 – Table: Sl. No. 1)
- The aggregate value of:
  - the undisclosed asset located outside India (as on 31 March 2026), and
  - the undisclosed foreign income,
    must not exceed ₹1 crore.
For Category 2 (Section 133 – Table: Sl. No. 2)
- The aggregate value of the foreign assets proposed to be declared must not exceed ₹5 crore.

If these limits are exceeded, the assessee cannot use the Scheme for that respective category.

D. Amount Payable – Tax and Fee Structure

Liability for Category 1 declarations

For declarations falling under `Section 133 – Table: Sl. No.

Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 – Complete Rewritten FAQ Guide