Govt opens window for disclosure of foreign assets, income

The government has opened a limited disclosure window for taxpayers to regularise specified foreign bank accounts, overseas property, jewellery, artwork, shares and securities and other foreign assets, as well as undisclosed foreign income, with ₹1 crore and ₹5 crore eligibility thresholds under two separate routes.

The Foreign Assets of Small Taxpayers Disclosure Scheme Rules, 2026, notified by the Central Board of Direct Taxes on August 14, will come into force on August 16.

The first route covers undisclosed foreign assets and undisclosed foreign income with an aggregate value of up to ₹1 crore. Taxpayers opting for this route will have to pay 60% of the declared value, which would be 30% tax and a penalty equal to the tax.

A second route covers specified foreign assets with an aggregate value of up to ₹5 crore. Eligible taxpayers under this category can settle the disclosure lapse by paying a ₹1 lakh fee, subject to conditions prescribed under the Finance Act, 2026.

The ₹5 crore route is not a blanket amnesty for undisclosed foreign wealth. It covers specified cases, including foreign assets acquired from income earned abroad while the taxpayer was a non-resident but not reported after becoming resident, and assets acquired from income already offered to tax in India but subsequently omitted from the relevant foreign-assets schedule.

The ₹5 crore threshold applies to the aggregate value of eligible assets. For instance, foreign mutual funds worth ₹2.5 crore and overseas securities worth ₹4 crore would take the total to ₹6.5 crore, making the taxpayer ineligible for this route.

For the ₹1 crore category, the rules illustrate a taxpayer with an undisclosed foreign bank account worth ₹60 lakh and undisclosed foreign income of ₹20 lakh. The resulting liability is ₹48 lakh, which would be ₹24 lakh in tax and an equal amount as penalty.The government has fixed March 31, 2026 as the valuation date. Detailed rules prescribe valuation methods for foreign bank accounts, immovable property, jewellery, artwork and quoted and unquoted securities, along with rules for conversion of foreign-currency values into rupees.

Declarations have to be filed electronically in Form 1, with December 31, 2026 specified as the last date.

After payment and fulfilment of the prescribed conditions, the taxpayer can receive certification of the declaration and, subject to the statutory provisions, immunity from further tax, penalty and prosecution under the Black Money law.