FAST-DS 2026: The Foreign Assets of Small Taxpayers Disclosure Scheme —
Who Can Declare, What It Costs and How to File Form 1

1. Introduction — Why This Window Matters

Anyone who has been resident in India and held a bank account, brokerage account, ESOP/RSU holding, property or other interest abroad knows how easily such an item can drop out of a return. A foreign account opened during a work assignment, shares received on vesting, an overseas property bought with salary earned abroad: each of these can later turn into an undisclosed foreign asset in the eyes of the law, with consequences far heavier than those for an ordinary domestic omission.

The reason is the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. As we explained in our companion note on assessment and reassessment time limits, there is no outer time limit on when the department can first act on an undisclosed foreign asset or income, so an old omission does not become safe by the mere passage of time. FAST-DS 2026 gives eligible taxpayers a one-time, statutory way out at a fixed and known cost, in exchange for immunity from further tax, penalty and prosecution under that Act.

The Scheme is not a general amnesty. It is confined to foreign assets and foreign income, it has hard monetary ceilings, it excludes certain proceedings, and the two categories are priced very differently. Choosing the wrong route, or valuing an asset incorrectly, can defeat the benefit of the Scheme. That is why this note treats it as a document-heavy statutory exercise rather than a simple portal form.

2. The Scheme at a Glance

The Act sets out the Scheme; the Rules supply the working detail: the fair market value method for each class of asset (Rule 3), the amount payable (Rule 4), the ceilings and the 20% variance tolerance (Rule 5), and Forms 1 to 4 (Rules 5 to 8). The Department's FAQs and the notified Rules can both be downloaded at the end of this article, and the Rules' own worked illustrations are referred to below.

3. Who Can Make a Declaration

3.1 The Two Residency Limbs

The Scheme speaks of an "assessee" who qualifies in one of two ways:

• Resident in the relevant previous year (as per section 6 of the Income-tax Act, 1961); or
• Non-resident or resident but not ordinarily resident (RNOR) in the relevant previous year, but resident in India either in the previous year to which the undisclosed foreign income relates, or in the previous year in which the undisclosed foreign asset was acquired.

3.2 The Three Grounds

A declaration can be made where the assessee has:

• failed to furnish a return under section 139 of the Income-tax Act, 1961; or
• failed to disclose the asset or income in a return furnished before the Scheme commenced; or
• such asset or income has escaped assessment within the meaning of section 147.

A declaration can relate to any previous year for income or assets covered by the table in section 133, subject to the monetary ceilings and conditions, and must be filed between 16 August 2026 and 31 December 2026.

4. The Two Categories — and Why You Cannot Choose by Price

Section 133 contains a table with two serial numbers. They look similar on the portal but rest on opposite premises about the money behind the asset.

4.1 Category 1 — Undisclosed Foreign Asset or Undisclosed Foreign Income

An undisclosed asset located outside India is an asset, including a financial interest in any entity, held in the assessee's own name or in respect of which he is the beneficial owner, where he has no explanation about the source of investment or the explanation given is, in the opinion of the Assessing Officer, unsatisfactory. Undisclosed foreign income is the total income from a source outside India that was chargeable to tax in India but has not been offered to tax. The aggregate of the value of such assets (as on 31 March 2026) and such income must not exceed ₹1 crore.

4.2 Category 2 — Explained Source, but Not Reported in the Schedule

This covers an asset located outside India that was either (a) acquired from income already offered to tax under the Income-tax Act, 1961, or (b) acquired from income accruing or arising outside India while the assessee was a non-resident, in each case where the asset was not declared in the relevant schedule of the return of income. The aggregate value of the assets must not exceed ₹5 crore.

4.3 Choosing the Category on the Facts

A single Form 1 can carry more than one category and more than one asset. The relevant parts and annexures of the form can be repeated for each asset or income item.

4.4 How the Ceilings Are Counted

The ceilings are tested on the aggregate: for Category 1, the value of the undisclosed assets on 31 March 2026 plus the undisclosed foreign income; for Category 2, the value of the specified assets. Rule 5 illustrates the position, and Rule 4 adds a Category 2 case:

Two practical points follow. Income from different years is added together, so a series of modest annual omissions can cross ₹1 crore. And crossing the ceiling is not a matter of trimming one item: if the aggregate exceeds the limit, the case is not covered by the Scheme at all.

5. Amount Payable

5.1 Category 1 — Tax Plus an Equal Amount

The payable amount is the aggregate of (i) tax at 30% on the value of the undisclosed foreign asset, or on the undisclosed foreign income declared, and (ii) an additional amount equal to the tax in (i). In effect, 60% of the declared base. On the portal, Part D of Form 1 computes this automatically as 60% of the combined value of the undisclosed assets and income.

5.2 Category 2 — Flat ₹1 Lakh

Where the aggregate value of the specified assets does not exceed ₹5 crore, the amount payable is a flat fee of ₹1 lakh, however many assets are declared within that ceiling. If the aggregate value is higher, for example ₹6.5 crore, the assessee is simply not eligible to avail the Scheme. The Rules' own illustration of the flat fee is a plot of land outside India, acquired in 2015 from income earned abroad while the assessee was a non-resident and not shown in the schedule after he became resident. Valued at ₹3 crore on the valuation date, it falls in Category 2 and costs ₹1 lakh. By contrast, foreign mutual fund units of ₹2.5 crore (bought from income offered to tax in India) together with quoted shares of ₹4 crore total ₹6.5 crore, which exceeds ₹5 crore, so the assessee cannot declare under the Scheme.

6. Valuing the Assets — Rule 3

Valuation drives the amount payable in Category 1 and decides whether the ceilings are met in both categories. The general rule is that fair market value (FMV) is the higher of the cost of acquisition and the price the asset would ordinarily fetch in the open market on 31 March 2026, ideally supported by a report from a valuer recognised by the government or its agency in the country where the asset is located. Where such market valuation is not carried out, the indexed cost of acquisition is deemed to be the FMV. Current market value on the date of filing, or plain purchase price, is not the test unless the Rule for that asset says so.

6.1 Unquoted Equity Shares — The Formula, and What "Quoted" Means

For unquoted equity shares, the FMV is the higher of the cost of acquisition and the value worked out as follows (indexed cost applies if this valuation is not carried out):

• A — book value of all assets other than bullion, jewellery, precious stones, artistic work, shares, securities and immovable property, reduced by income-tax paid (less any refund claimed) and by any amount shown as an asset, including unamortised deferred expenditure, that does not represent the value of any asset.
• B — FMV of bullion, jewellery, precious stones, artistic work, shares, securities and immovable property, determined as per Rule 3.
• L — book value of liabilities, but excluding paid-up equity capital, amounts set apart for dividends, reserves and surplus (other than those set apart for depreciation), provisions for taxation and for liabilities that are not ascertained (subject to the Rule's carve-outs), and contingent liabilities (other than arrears of cumulative preference dividends).
• PE — total paid-up equity share capital as shown in the balance-sheet; PV — paid-up value of the equity shares being valued.

Whether a share is quoted or unquoted decides which method applies, and the Rules define it narrowly. A share or security is quoted only if it has a meaningful volume of trading on an ongoing basis on an established securities market and is regularly quoted by dealers. Trading must take place, other than in de minimis quantities, on at least sixty business days in the prior calendar year, and the shares traded must be at least ten per cent of the average shares outstanding in that class. An established securities market is an officially recognised and supervised exchange whose annual value of shares traded exceeded one billion US dollars in each of the three calendar years before the valuation date. Anything else is unquoted, which matters for shares in a small overseas company or an ESOP in an unlisted foreign start-up.

6.2 Foreign Bank Accounts — Deposits, Not Balance

A foreign bank account is valued at the total of deposits made since it was opened, not at the closing balance on 31 March 2026. Two exclusions prevent double counting: deposits made out of the proceeds of a withdrawal from the same account are left out; and where the account or part of it was earlier declared under Chapter VI of the Black Money Act, 2015 and tax and penalty were charged, only deposits made since that earlier declaration are counted. The Rules (Illustrations 1 and 2 under Rule 3(1)(e)) and the Department's FAQs illustrate this with an account opened in 2010 (figures in US dollars, to be converted into rupees as on 31 March 2026):

If the same taxpayer had earlier declared the deposits up to 2013 under Chapter VI of the Black Money Act, 2015, only the deposits since that declaration count: $2,500 plus $600, a value of $3,100.

6.3 Assets Sold Before the Valuation Date

Rule 3(2) deals with an asset, other than a bank account, that was transferred before 31 March 2026. Its FMV is the higher of its cost of acquisition and the sale price. Where the transfer was without consideration or for inadequate consideration, the FMV is the higher of the cost of acquisition and the FMV on the date of transfer. An asset that has been sold is therefore not valued at zero merely because it is no longer held on the valuation date.

6.4 Reinvestment — The Same Money Is Not Counted Twice

Where a new asset was acquired out of the consideration received on transfer of an old asset, or out of a withdrawal from a bank account, the FMV of the old asset or the account is reduced by the amount invested in the new asset (Rule 3(3)). The Rules illustrate this with a foreign house sold and the proceeds moved through a bank account into a second house:

The same logic applies to income. In the Rules' second illustration, undisclosed foreign income of ₹70 lakh was used to buy a foreign property for ₹60 lakh, now worth ₹80 lakh. The income is reported at ₹10 lakh (₹70 lakh less ₹60 lakh invested) and the property at ₹80 lakh.

6.5 Currency and the 20% Variance Rule

• Currency. All values are reported in rupees. For a currency designated by the Reserve Bank of India under the Foreign Exchange Management (Deposit) Regulations, 2016, conversion is at the RBI reference rate on the valuation date. For any other currency, the value is first converted into US dollars at the rate specified by the central bank (or, failing that, another regulated bank) of the country where the asset is located, and then into rupees at the RBI reference rate on the valuation date.
• Variance tolerance. For assets other than a bank account, a variance not exceeding 20% of the FMV declared will not by itself make the declaration invalid on the ground of misrepresentation, suppression of facts or false particulars (Rule 5(2)). This is a safety net for honest valuation differences, not permission to use an arbitrary figure, and it does not apply to bank accounts.

7. Filing Form 1 on the e-Filing Portal

7.1 Before You Start

• A valid PAN registered on the e-Filing portal.
• Complete particulars of each asset and income item, with fair market value as per Rule 3.
• Supporting documents as PDF or ZIP, up to 5 MB per attachment: evidence of acquisition or earning, passport details where relevant, valuation reports for immovable property, jewellery, artistic work, unquoted shares and securities or any other asset, and any separate computation of value.
• An e-verification mode ready: Aadhaar-registered mobile OTP, Digital Signature Certificate (DSC), or Electronic Verification Code (EVC) through a bank or demat account.

7.2 The Eight Tabs of Form 1

On the portal, the path is e-File → Income Tax Forms → File Income Tax Forms → Forms as per other Acts, then "Foreign Assets of Small Taxpayers' Disclosure Scheme 2026 (Form 1 of FADS 2026)". The form is built around eight tabs:

Once every mandatory tab shows "Completed", the Preview becomes active. The preview can be downloaded as a copy of the form as filed; the filing is then completed through "Proceed to e-Verify" using the chosen mode.

8. After Filing — Forms 2, 3 and 4 and the Payment Clock

8.1 Time to Pay

• The amount in the Form 2 order must be paid within two months from the end of the month in which the order is received.
• If that is missed, payment can still be made within a further period not exceeding two months, with simple interest at 1% for every month or part of a month of delay, computed on the amount due.
• The outer limit is four months from the end of the month in which Form 2 was passed. After that, the benefit of the Scheme ceases for that declaration.
• Form 2 itself states that if the amount is not paid within the time allowed, the declaration in Form 1 is treated as void and deemed never to have been made.
• Payment under the Scheme can be made in parts. Form 3 records the amount paid by the initial due date, the outstanding amount, the months of delay and the interest on the outstanding amount, for a maximum of two additional months.

The Rules' own illustration shows the clock at work. For ₹48 lakh payable and a Form 2 order passed on 22 September 2026, the end of the month is 30 September 2026. Payment up to 30 November 2026 carries no interest; payment on 17 December 2026 carries 1% (₹48,000, total ₹48,48,000); payment on 23 January 2027 carries 2% (₹96,000, total ₹48,96,000); and payment after 31 January 2027, four months from 30 September 2026, is beyond the permitted period and the Scheme benefit is not available.

Payment is made by challan ITNS 289, which, as reported in the Department's payment guidance, carries Assessment Year 2026-27 pre-filled for Scheme payments irrespective of the year in which the asset was acquired or the income arose. The same guidance cautions that a payment made under a wrong minor head cannot be corrected or refunded through the Scheme process, so the PAN category, challan head and Form 2 amount should be matched before paying. Confirm the live challan instructions on the portal at the time of payment.

9. Worked Example — From Form 1 to Form 4

Take a resident individual with an undisclosed foreign bank account valued under Rule 3 at ₹60 lakh and undisclosed foreign income of ₹20 lakh. Assume Form 1 is filed on 20 November 2026 and the Form 2 order is passed and received in December 2026 (illustrative dates, applying the time limits above).

Form 3 is filed with proof of payment within the same period, and Form 4 follows within one month from the end of the month in which Form 3 was received. Had the same person's only omission been, say, a ₹3 crore overseas brokerage account funded from taxed Indian income and left out of Schedule FA, the cost would have been the flat ₹1 lakh under Category 2, provided the source evidence stands up.

10. What a Valid Declaration Gives, and What It Does Not

10.1 The Benefits

• Immunity from the levy of any further tax or penalty, and from prosecution, under the Black Money Act, 2015 in respect of the income or asset declared.
• The declared income, or the amount invested in the declared asset, is not included in total income under the Income-tax Act, 1961 or the Black Money Act.
• Where assessment proceedings are pending for the declared income or asset, the Assessing Officer must take the declaration into account while finalising the assessment.
• The immunity is formally recorded in the Form 4 order, which certifies the payment, holds the declaration valid and grants immunity from further tax, penalty and prosecution under the Black Money Act, 2015, subject to sections 130 to 144.

10.2 The Limits

• For the income or asset declared, or any amount paid, the declarant cannot claim rectification or revision of an assessment already made under the Income-tax Act or the Black Money Act, and cannot claim set-off or relief in any appeal, reference or other proceeding relating to that assessment.
• The Scheme does not apply to any income or asset that directly or indirectly represents proceeds of crime where proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002.
• It also does not apply to any income or asset relating to an assessment year for which assessment proceedings have already been completed under the Black Money Act, 2015.

11. Pre-Filing Checklist

1. Prepare a year-wise inventory of every foreign account, security, ESOP/RSU holding, property and other overseas interest, in your own name or as beneficial owner.
2. Fix the acquisition date of each item and your residential status for that year (and for the year of any related income).
3. Trace the source of funds and whether that income was offered to tax in India.
4. Compare against historical returns, Schedule FA, Form 67 and the Annual Information Statement.
5. Classify each item into Category 1 or Category 2 on the facts, not on the cost.
6. Apply the Rule 3 valuation method and currency conversion for every asset as on 31 March 2026, and obtain valuer's reports where needed.
7. Check the exclusions: proceeds of crime proceedings under the PMLA and years already assessed under the Black Money Act.
8. Check both ceilings: ₹1 crore for Category 1 and ₹5 crore for Category 2.
9. Have Form 1 and the evidence reviewed before e-verification, and keep working papers.
10. After Form 2, pay on time under the correct challan head and file Form 3 within the period allowed.

12. Final Takeaway

FAST-DS 2026 offers something rare: a fixed, calculable price for closing an exposure that otherwise has no time limit. For a taxpayer whose only lapse is that an overseas asset funded from taxed income was never shown in the schedule, the flat ₹1 lakh is a very small price for certainty. For a taxpayer with genuinely unexplained overseas money, 60% is heavy, but it is known, it ends the Black Money Act exposure for what is declared, and it replaces an open-ended risk of tax, penalty and prosecution with a fixed, known cost. What the Scheme does not forgive is carelessness in the filing itself: the wrong category, an unsupported valuation, or a missed payment date. With the last date less than three months away, the preparatory work, namely the inventory, the residency analysis and the source tracing, is what should start now.