CBDT Notifies Foreign Asset Disclosure Scheme for Small Taxpayers
The Central Board of Direct Taxes (CBDT) has notified the Foreign Assets of Small Taxpayers-Disclosure Scheme Rules, 2026 through CBDT Notification No. 114/2026 (G.S.R. 732(E)) dated 14 August 2026. The rules operationalise the one-time disclosure window created by Chapter IV (sections 130 to 144) of the Finance Act, 2026, and were issued under section 143 of that Act. The scheme opened on 16 August 2026 and declarations can be filed until 31 December 2026. The CBDT has also published FAQs on FAST-DS 2026 explaining eligibility, valuation and payment.
The scheme is aimed at individuals with relatively small overseas holdings that were not properly reported in Indian income tax returns, such as bank accounts, shares or property. It offers immunity under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in exchange for a declaration and payment.
Two categories of declaration
| Category | Who it covers | Limit (value as on 31 March 2026) | Amount payable |
|---|---|---|---|
| Undisclosed foreign income or assets | Foreign income not offered to tax, or overseas assets acquired from such income | Aggregate value of assets and income up to Rs 1 crore | Tax at 30% of the value declared, plus an additional amount equal to 100% of that tax |
| Assets already taxed but not reported | Overseas assets acquired from income already taxed or from income earned as a non-resident, but omitted from the foreign asset schedules of returns | Aggregate value of assets up to Rs 5 crore | Flat fee of Rs 1 lakh |
Who can use the scheme
According to the FAQs, the scheme is open to a person who is resident in India under section 6 of the Income-tax Act, 1961, and to a non-resident or not ordinarily resident person who was resident either in the previous year to which the undisclosed foreign income relates or in the previous year in which the overseas asset was acquired.
Two situations are excluded:
- income or assets that represent proceeds of crime for which proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002; and
- income or assets relating to an assessment year for which assessment under the Black Money Act, 2015 has already been completed.
Valuation rules
All assets are valued as on 31 March 2026, with foreign currency converted at the RBI reference rate on that date. The notification sets out the method for each class of asset:
- Bank accounts: the sum of all deposits made from the date of opening till the valuation date, excluding re-deposits of amounts earlier withdrawn from the same account.
- Shares: quoted shares at market price; unquoted equity shares under a book value formula adjusted for the fair market value of certain assets and for liabilities.
- Immovable property: the higher of cost of acquisition and the open market price as per a report of a recognised valuer.
For assets other than bank accounts, the FAQs state that a variance of up to 20% of the fair market value declared will not, by itself, make the declaration invalid.
Filing, payment and immunity
The declaration is filed electronically in Form 1. The tax authority then passes an order in Form 2 stating the amount payable. The declarant intimates payment in Form 3, and payment is confirmed in Form 4. Payment is due within two months from the end of the month in which the Form 2 order is received. A further period of up to two months is available with simple interest at 1% for every month or part of a month of delay. If the amount is not paid within four months from the end of the month in which the Form 2 order was passed, the benefit of the scheme ceases for that declaration.
A valid declaration gives immunity from further tax, penalty and prosecution under the Black Money Act, 2015 for the amounts declared. Declared income or assets are not included in total income under the Income-tax Act, 1961 or the Black Money Act. The declarant cannot seek rectification or revision of an assessment already made, or set-off or relief in any appeal, on the basis of the declaration.
What CAs and tax advisers should do now
Advisers should first build a complete inventory of each client's overseas accounts, securities, retirement or employee stock holdings and property, map each item to the year of acquisition, and compare it with Schedule FA and income disclosures in past returns. This decides whether the client falls in the 30% tax category, the Rs 1 lakh fee category, or neither.
The valuation should be worked out using the notified method, not the account balance alone. For a bank account, the aggregate of deposits since opening can be much higher than the current balance, which may push a client over the Rs 1 crore or Rs 5 crore limit. Keep source statements, currency conversion workings and a year-wise reconciliation on file before submitting Form 1, since the declaration must be certified as correct and complete. The window closes on 31 December 2026.
Updated on 27 September 2026: Replaced a general note with the official details of CBDT Notification No. 114/2026 and the CBDT FAST-DS FAQs, including eligibility, the two categories, limits, rates, valuation rules, forms, payment timelines and immunity; merged the duplicate reports on the same rules.
