India’s Foreign Asset Disclosure Scheme: Key Details

If you have undisclosed foreign income or assets, the Indian Income Tax Department has opened a new, one-time disclosure window. This scheme, called the Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS), is available from August 16 to December 31.

Understanding FAST-DS: Two Key Categories

The FAST-DS offers two main paths for you to declare foreign assets, each with different conditions and implications.

• For undisclosed and untaxed foreign income or assets up to Rs 1 crore, you’ll pay 30% of the fair market value (FMV) as tax, plus an additional 30% income tax in lieu of penalty. This gives you immunity from prosecution.
• If you need to declare foreign assets up to Rs 5 crore that were already taxed or acquired as a non-resident but not reported in your Income Tax Returns (ITR), a fee of Rs 1 lakh applies. This protects you from a potential Rs 10 lakh fine for non-disclosure.

What Assets Can You Disclose?

This scheme covers a wide range of foreign assets and income you might hold, providing a comprehensive opportunity to regularize your financial standing.

• Foreign bank accounts
• Immovable property
• Jewellery
• Artistic work
• Shares and securities
• Unreported Restricted Stock Units (RSUs) or Employee Stock Option Plans (ESOPs)

It’s important to remember that this scheme strictly excludes income or assets from criminal proceeds under the Prevention of Money-laundering Act, 2002, and assets related to assessment years already finalized under the Black Money Act, 2015.

Why This Window Matters Now

You might wonder why this scheme is being introduced now, and experts point to the Income Tax Department’s advanced data capabilities.

The department already has extensive information on foreign assets through international data exchange mechanisms. This includes the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA), with this data now integrated into your Annual Information Statement (AIS).

Understanding Valuation and Payment Deadlines

When it comes to valuing your assets under this scheme, the official valuation date is March 31, 2026, which is when the fair market value (FMV) will be determined.

The FMV is generally the higher of the asset’s acquisition cost or its open market price on the valuation date, ideally backed by a government-recognized valuer’s report.

• Declarations must be made electronically using Form 1.
• A variance of up to 20% between your declared FMV and the tax authorities’ value won’t invalidate the declaration (except for bank accounts).
• Payments are due within two months of receiving the income-tax authority’s order.
• You can get an additional two months to pay, but this incurs a 1% simple interest per month.
• Failing to pay within this extended four-month period means you will lose all the benefits of the scheme.

This limited-time scheme offers a clear path for you to regularize your foreign assets and avoid potential fines, so consider these details carefully if it applies to your situation.