From August 16, a one-time window has been opened for specific taxpayers to report particular foreign assets and income. The Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS) will remain open till December 31, 2026.
The scheme includes specific foreign assets and income that were not reported before, as per the specified limits, and payment of tax or a fee.
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Who Can Utilise?
The scheme includes eligible residents, and in particular cases, people who are now non-residents or RNORs but were residents when the foreign income was earned, or the asset was acquired.
The same could be utlised where a taxpayer did not submit a return, failed to report the foreign asset or income in a return already filed, or the income or asset escaped assessment.
What Can Be Reported?
Two things are classified.
The first includes undisclosed foreign assets or foreign income not offered to tax in India. The combined value cannot be more than Rs 1 crore.
The second includes foreign assets that were already offered to tax or acquired when the taxpayer was non-resident, but were not reported in the relevant ITR schedule. The asset value cannot be more than Rs 5 crore.
What is its Cost?
Concerning undisclosed foreign assets or income, the taxpayer files 30% tax, including an additional amount equal to the tax, effectively 60% of the declared value.
Concerning assets that were previously taxed but were skipped from the ITR disclosure, the scheme furnsihes for a Rs 1 lakh fee, given the asset value is within the Rs 5 crore limit.
What is the Method to Value the Asset?
March 31, 2026, is the valuation date. Generally, the fair market value is determined as the greater of the acquisition cost or the open-market value on a specific date. Different valuation rules apply to various types of assets, including property, shares, jewellery, and foreign bank accounts.
For a foreign bank account, the value is primarily based on deposits made until March 31, 2026, with certain exclusions applied.
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Working Procedure
It is crucial to file the declaration online in Form 1, as well as the documents supporting the asset or income and valuation documents where applicable.
The tax authority will provide a payment order in Form 2. The taxpayer gets two months’ time to pay, with an additional period of up to two months permitted at 1% simple interest per month or part thereof.
Post payment, it is important to submit Form 3, after which the authority issues a certificate in Form 4.
What Protection Does it Furnish?
Concerning a valid declaration and payment, the taxpayer obtains protection from further tax, penalty, and prosecution under the Black Money Act concerning the declared income or asset.
It’s important to note that this scheme does not apply to assets or income derived from criminal activities if there are ongoing proceedings under the Prevention of Money Laundering Act. Additionally, it does not apply to assessment years for which proceedings under the Black Money Act have already been completed.
What Needs to be Verified by Taxpayers?
The question is whether the foreign asset or income was never reported for tax purposes, or if it was previously taxed but simply omitted from the foreign assets disclosure in the Income Tax Return (ITR).
The applicable limits, valuation methods, and payment processes differ for these two categories. Therefore, taxpayers considering this option should determine the nature, value, and tax history of the foreign asset before filing.
