CBDT FAST-DS: Black Money Act Immunity, Not FEMA Protection
By ThePip Desk
India’s CBDT FAST-DS offers immunity under the Black Money Act for unreported foreign assets but lacks protection under FEMA, posing potential risks.
The Central Board of Direct Taxes (CBDT) has launched the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS), providing a one-time chance for small taxpayers to regularize their unreported foreign assets. While this scheme grants immunity from prosecution and penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, tax experts caution that it does not extend protection under the Foreign Exchange Management Act (FEMA).
Understanding FEMA Exposure
Resident Indians who acquired foreign assets without the necessary Reserve Bank of India (RBI) approval could still face substantial penalties under FEMA. These penalties may include up to 300% of the asset’s value, daily fines, and the potential confiscation of Indian assets.
The FAST-DS remains open until December 31, 2026, covering a broad range of foreign assets. These include:
Foreign bank accounts.
Employee stock options (ESOPs).
Restricted stock units (RSUs).
Mutual fund investments.
Immovable property investments.
Navigating the Disclosure Categories
The scheme is structured into two distinct categories, each addressing different scenarios of asset acquisition and disclosure. Understanding these categories is crucial for taxpayers considering regularization.
Category A encompasses foreign income or assets that were never disclosed and on which no Indian tax was ever paid. This category allows for the disclosure of assets valued up to Rs 1 crore as of March 31, 2026.
Taxpayers under Category A must pay a total levy of 60%. This levy comprises 30% tax and an additional 30% penalty calculated on the fair market value of the disclosed assets.
Category B applies to assets purchased using Indian income that was already taxed, or assets acquired while the taxpayer was a non-resident but omitted from Income Tax Return (ITR) disclosures after becoming a resident. This category permits the regularization of assets up to Rs 5 crore.
For Category B, a flat fee of Rs 1 lakh is required for regularization. Tax experts suggest that returning non-resident Indians could find the scheme useful, provided they carefully assess their individual FEMA exposure.