CBDT has notified the Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026. From 16 August 2026 to 31 December 2026, eligible residents can disclose modest undeclared foreign assets and income with limited cost and immunity from Black Money Act penalties and prosecution.
Why this scheme exists
Many resident taxpayers hold small foreign bank accounts, shares, or property — often opened years ago, sometimes before they became Indian residents — that were simply never reported in the foreign assets schedule of their tax return. Under the Black Money Act, even an honest oversight can attract steep penalties and criminal proceedings. This scheme offers a one-time, low-cost route to disclose such assets and get immunity from those consequences, provided the amounts involved are modest.
Who can use it
The scheme covers two broad situations, each with its own value cap:
Category 1 — Undisclosed foreign assets and income up to ₹1 crore
If you have an undeclared foreign bank account, property, jewellery, shares, or other asset, and/or undisclosed foreign income, and the combined value (as on the valuation date of 31st March 2026) does not exceed ₹1 crore, you can declare it under this category.
Category 2 — Foreign assets up to ₹5 crore (flat fee only)
This applies where (a) you acquired the asset while you were a non-resident, using income earned abroad, but forgot to disclose it after becoming a resident, or (b) you acquired the asset using income that was already taxed in India, but simply left it out of the foreign assets schedule. Here, the aggregate value must not exceed ₹5 crore — and there is no aggregate value tied to tax at all, just a flat fee.
What it costs
| Category | Value cap | Amount payable |
|---|---|---|
| Undisclosed foreign assets / income | Up to ₹1 crore | About 60% of FMV (≈ 30% tax + 100% penalty on that tax) |
| Already-taxed / pre-residency assets | Up to ₹5 crore | No tax or penalty — fee capped at ₹1 lakh |
For the first category (assets/income up to ₹1 crore), the amount payable works out to 60% of the fair market value — broadly, 30% tax plus a 100% penalty on that tax, effectively 60% of the aggregate value declared.
For the second category (assets up to ₹5 crore, already-taxed money or pre-residency acquisitions), there is no tax or penalty at all — just a modest fee, which the rules cap at ₹1 lakh.
How assets are valued
The rules lay down a detailed valuation methodology for different asset types — bullion and jewellery, art, quoted and unquoted shares, immovable property, partnership interests, and bank accounts. As a general principle, the fair market value is the higher of the original cost (adjusted for inflation, where a fresh valuation isn’t obtained) and the current market value on the valuation date of 31st March 2026.
Foreign bank accounts are valued as the total of all deposits made into the account over its life (or since a prior Black Money Act declaration, if one was made), excluding money that was simply withdrawn and redeposited.
The process, in brief
- 1File an electronic declaration in Form 1, giving full details of the asset or income and its valuation.
- 2The tax authority reviews it and issues Form 2, an order specifying the amount payable.
- 3You pay within two months of the order (with a further two months allowed if you pay interest at 1% per month on the delay), and report the payment in Form 3.
- 4Once payment is confirmed, the authority issues Form 4, certifying your declaration as valid and granting immunity from further tax, penalty, and prosecution under the Black Money Act for the disclosed asset or income.
The bottom line
This is a narrow but genuinely useful window for taxpayers with modest, unreported foreign holdings to clean up their filings and avoid the far more punitive consequences of the Black Money Act. Because eligibility, valuation, and the amount payable all depend heavily on the specifics of each asset, it’s worth getting a proper assessment done before the 31st December 2026 deadline rather than assuming you don’t qualify — or worse, assuming you do.
Need help assessing eligibility?
PJRJ & Associates assists residents and returning NRIs with foreign asset reporting, Schedule FA reviews, Black Money Act exposure assessment, and declaration strategy under the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 — from offices in Delhi and Gurgaon.
- 1Eligibility review under the ₹1 crore and ₹5 crore categories
- 2Asset valuation support as on 31 March 2026
- 3Form 1 preparation and electronic filing coordination
- 4Payment computation, Form 3 reporting, and Form 4 follow-up
- 5Ongoing Schedule FA and ITR foreign-asset compliance
Talk to a PJRJ partner
Need filing, formation, FEMA, or tax advice on this topic? Reach a partner in Delhi or Gurgaon — WhatsApp-first for India and overseas clients (IST hours).
Quick answers
Direct answers to common questions on this topic.
It is a limited CBDT scheme under the Finance Act, 2026 that lets eligible resident taxpayers disclose modest undeclared foreign assets and/or foreign income, pay a prescribed amount or fee, and obtain immunity from Black Money Act tax, penalty, and prosecution for what is disclosed. The rules were notified on 14 August 2026 and apply from 16 August 2026 to 31 December 2026.
Two categories apply: (1) undisclosed foreign assets and income with aggregate fair market value up to ₹1 crore as on 31 March 2026; or (2) foreign assets up to ₹5 crore acquired while a non-resident from foreign income, or acquired from income already taxed in India but omitted from the foreign assets schedule. Amounts above these caps are outside the scheme with no partial relief.
For the ₹1 crore category, the amount payable is broadly 60% of fair market value (about 30% tax plus a 100% penalty on that tax). For the ₹5 crore category covering already-taxed money or pre-residency acquisitions, there is no tax or penalty — only a fee capped at ₹1 lakh.
Declarations must be made by 31 December 2026. After Form 2 is issued, payment must be made within two months, with a further two months available if interest at 1% per month is paid. Missing the outer payment window (maximum four months from the end of the month of the order) means scheme benefits are lost.
Yes, for the asset or income covered by a valid declaration. After payment and Form 4, the taxpayer gets immunity from further tax, penalty, and prosecution under the Black Money Act for that disclosed asset or income — subject to the scheme’s conditions.
Ready to discuss your requirements?
Speak directly with a partner at PJRJ & Associates — audit, tax, advisory, or FinTech.