Foreign Assets Disclosure Scheme Opens August 16 for Small Taxpayers

The government will give small taxpayers a single opportunity to disclose certain undisclosed foreign assets and income by 31 December 2026, as per a Business Standard news report.  

The Foreign Assets Disclosure Scheme was announced in Budget 2023 and applies to two categories of taxpayers. 

Two Categories Apply to the Scheme 

For taxpayers having undisclosed foreign assets or income up to one crore rupees, the payment will be 60%, comprising 30% tax and the additional 30% equal to the tax on the value of the assets and income. In the case of undisclosed income, the 30% tax will be levied on the amount of income in addition to tax on the value of assets.  

Another category consisted of undisclosed foreign assets with a value of up to five crore rupees purchased from income offered to tax or acquired while the taxpayer was a non-resident in India but remained undisclosed. One lakh rupees were payable in this category 

Value as on 31 March 2026 

The value of assets as on 31 March 2026 will be taken for calculating tax liability under the scheme in most cases with fair market value being the higher of the cost to purchase the asset and the price at which the asset could be sold on that date.  

The scheme specified other methods to calculate the value of bank accounts, jewellery, property, and listed and unlisted securities.  

In the case of bank accounts, deposits made in the account from the date of its opening till 31 March 2026 generally constitute the value of the account, with the following exclusions 

Submission In Form 1 And Payment Via Online Mode 

Taxpayers will have to electronically submit the declaration in Form 1 to the tax authorities specifying the assets and income along with the payment of taxes, if any, due under the scheme.  

The scheme was applicable to residents, certain non-residents, and RNOR (Resident but Not Ordinarily Resident) taxpayers. The scheme specified certain conditions for each category of taxpayers and provided that the tax authorities will send the amount payable under the scheme to the taxpayer in Form 2 within one month of the end of the month during which the taxpayer submitted the declaration.  

The taxpayer had to pay the amount within two months of the end of the month during which the order was received. The taxpayer could make the payment within two more months with interest at 30% per annum, or 1% per month 

Immunity From Further Proceedings Upon Valid Declaration and Payment 

A valid declaration and payment according to the scheme will provide immunity from all further tax, penalty, and prosecution proceedings under the Black Money Act for the particular category of assets and income declared. 

Further, the scheme did not apply to assets or income derived from proceeds of crime where prosecution or investigation was pending under the Prevention of Money Laundering Act, or where assessment under the relevant provisions of the Black Money Act had already been completed. 

Read More: IPO Alert: Muthoot Fincorp Files DRHP with SEBI to Raise Funds! 

Conclusion 

The one-time disclosure window under the Foreign Assets Disclosure Scheme will open on 16 August and remain open till 31 December 2026. Different categories of taxpayers will be required to pay different percentages of tax on the value of foreign assets and income. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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