A resident of India has to report foreign assets in Schedule FA of the income-tax return. The Income Tax Department's guide says the schedule need not be filled if you are 'not ordinarily resident' or non-resident, so your residential status for the year decides whether the duty applies at all. For residents, the guide says the duty covers all types of foreign holdings. The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS, called FADS 2026 on the e-filing portal) is a one-time window to declare past omissions. Declarations can be filed from 16 August 2026 to 31 December 2026.
Who the scheme is meant for
The Finance Ministry's memorandum to the Finance Bill, 2026 names the cases it had in mind: holdings from foreign employment benefits such as ESOPs or RSUs, dormant or low-value foreign bank accounts of former students, savings or insurance policies of returning non-residents, and assets of people on overseas deputation. It also says information received under the Automatic Exchange of Information framework shows that a significant number of PAN holders have not disclosed foreign financial assets.
In legal terms, the Bill opens the scheme to a person who was resident in India under section 6 of the Income-tax Act, 1961 in the year concerned. A person who is now non-resident or not ordinarily resident can also use it if they were resident in the year the foreign income relates to, or in the year the foreign asset was acquired. A declaration can cover any earlier year in which the person did not file a return, filed one without disclosing the asset or income, or had the income escape assessment within the meaning of section 147 of the 1961 Act.
The memorandum says cases involving prosecution or proceeds of crime are excluded. The Bill's text lists two exclusions: income or assets that represent proceeds of crime where proceedings under the Prevention of Money-laundering Act, 2002 have been started or are pending, and any assessment year for which assessment under the Black Money Act has already been completed.
Try it on your numbersIncome Tax CalculatorOld vs New regime, side by side (FY 2026-27)The two categories and what each costs
The category depends on the money behind the asset: whether it was ever taxed in India, or earned while the person was a non-resident. The Table in section 133 of the Finance Act, 2026 sorts declarations into two serial numbers, and the Form 1 user manual on the e-filing portal shows the same split in Parts C and D of the form.
Finance Act, 2026, section 133, Table Sl. Nos. 1 and 2, as shown in the FADS 2026 Form 1 user manual (Part D: item 5 = 60% of the Category 1 total; item 6 = Nil or ₹1,00,000; item 7 = the two added together). The Bill's Table values a Category 1 asset as on 31 March 2026.
1
- What it covers
- An undisclosed asset located outside India, or undisclosed foreign income (income from a source outside India that was chargeable to tax in India but not offered to tax)
- Amount payable
- 30% tax on the fair market value of the asset and on the foreign income, plus an equal amount: 60% in all
- Limit
- Asset value and foreign income together up to ₹1 crore
2
- What it covers
- A foreign asset bought from income already offered to tax in India, or from income earned abroad while a non-resident, that was not shown in the return's schedule
- Amount payable
- A fee of ₹1,00,000 (the form shows Nil or ₹1,00,000, as applicable)
- Limit
- Value of such assets up to ₹5 crore
| Category | What it covers | Amount payable | Limit |
|---|---|---|---|
| 1 | An undisclosed asset located outside India, or undisclosed foreign income (income from a source outside India that was chargeable to tax in India but not offered to tax) | 30% tax on the fair market value of the asset and on the foreign income, plus an equal amount: 60% in all | Asset value and foreign income together up to ₹1 crore |
| 2 | A foreign asset bought from income already offered to tax in India, or from income earned abroad while a non-resident, that was not shown in the return's schedule | A fee of ₹1,00,000 (the form shows Nil or ₹1,00,000, as applicable) | Value of such assets up to ₹5 crore |
The Act does not name RSUs or US shares in either category; the memorandum lists RSUs and ESOPs only as cases the scheme is aimed at. On our reading of the Table's wording, RSUs taxed as salary through payroll, and US shares bought through the Liberalised Remittance Scheme with salary already taxed here, look like assets acquired from income offered to tax, which is Category 2. Income that was never taxed, such as unreported interest on a foreign account or dividends on foreign shares, looks like undisclosed foreign income, which is Category 1. The facts that move an item between the two are: whether the money that bought it was offered to tax in India, whether it was earned while the person was a non-resident, and whether the income it produced was reported. One declaration can carry items from both categories, and the two amounts are then added.
Worked examples
Two illustrative cases. The people and values are made up, the category is our reading as above, and the arithmetic follows the Table.
- Ananya, Bengaluru: RSUs of her US parent vested in several past years and were taxed through payroll, but she filed ITR-1 and never listed them. The shares are worth ₹38,00,000. Read as Category 2 and within ₹5 crore, the amount payable is the fee: ₹1,00,000.
- Kabir, Pune: over the years his US brokerage account earned ₹2,40,000 of dividends and interest that he never reported. Read as undisclosed foreign income (Category 1): tax ₹2,40,000 × 30% = ₹72,000; equal amount ₹72,000; total ₹72,000 + ₹72,000 = ₹1,44,000.
- If Kabir also held shares like Ananya's, taxed through payroll but not listed, a single declaration would come to ₹1,00,000 + ₹1,44,000 = ₹2,44,000.
The amount is fixed by an order the department sends (Form 2), so these figures are estimates until that order arrives. The Form 1 manual shows the aggregate value worked out 'as per Rule 3'.
What the payment buys
The memorandum describes 'limited immunity from penalty and prosecution under the Black Money Act' for matters covered by a declaration. In the Bill's words, a declarant who makes a valid declaration and pays in accordance with the scheme gets immunity from any further tax or penalty, and from prosecution, under the Black Money Act for the income or asset declared, for the previous year ending 31 March 2026 or any earlier previous year. The declared income or investment is also not included in total income under the Income-tax Act, 1961 or the Black Money Act, if the payment is made within the extended period. The Bill attaches these conditions:
- No amount paid under the scheme is refundable.
- The declarant cannot claim rectification or revision of a past assessment, or any set-off or relief in an appeal, for the income or asset declared or the amount paid.
- The declaration is invalid if any material particular in it is found to be false at any stage, or if the declarant violates any condition of the scheme.
What the Black Money Act provides for non-disclosure
The penalty for leaving foreign assets out of a return is in the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, not the Income-tax Act. The Finance Ministry's 2024 memorandum explains that section 42 covers a resident who has a foreign asset or foreign income and does not file a return, and section 43 covers a resident (other than not ordinarily resident) who files but does not furnish, or furnishes inaccurate, details of a foreign asset or foreign income. It says either failure may attract a penalty of ₹10 lakh regardless of the value of the asset.
Before 1 October 2024, those sections did not apply only to bank accounts with an aggregate balance not exceeding ₹5 lakh at any time in the year. From 1 October 2024 they do not apply to an asset or assets, other than immovable property, whose aggregate value does not exceed twenty lakh rupees (the memorandum's words; the Budget speech of 2026 puts it as 'less than 20 lakh'). The duty to report in Schedule FA is unchanged.
Prosecution is separate. Sections 49 and 50 of the Black Money Act provide for prosecution, including rigorous imprisonment and fine, where a resident wilfully fails to file a return or wilfully leaves out foreign assets or income. The Finance Bill, 2026 (clause 144) proposed that these two sections also not apply where non-immovable foreign assets do not exceed ₹20 lakh in aggregate, with effect from 1 October 2024. We have not seen the enacted text of that amendment.
How filing works: Form 1 to Form 4
- Prerequisites listed in the manual: PAN registered on the e-filing portal, details and fair market value of each foreign asset and income item, supporting papers (PDF or ZIP, up to 5 MB each), and an e-verification method: Aadhaar OTP, a digital signature certificate, or EVC through a bank or demat account.
- Opening the form: e-File > Income Tax Forms > File Income Tax Forms, then under 'Forms as per other Acts', FADS 2026 Form 1 > File Now. Filing a fresh Form 1 makes any earlier one non-actionable.
- Contents: Part A (basic details, optional passport), Part B (the four types: undisclosed foreign asset, undisclosed foreign income, asset from non-resident income, asset from income already taxed), one annexure per type with assets under A1 to A6 (bank accounts, immovable property, jewellery, artistic work, shares and securities, any other asset), then Parts C and D, which compute the totals and the amount payable.
- Submission: e-verify.
- Form 2: the department's order with the amount payable, within one month from the end of the month in which Form 1 is submitted.
- Payment with challan ITNS 289: e-File > e-Pay Tax > Income Tax Act 1961 > New Payment > FAST-DS (ITNS 289); a pre-login route also exists. One challan covers both tax and fee. The minor head is filled from the PAN type (115 for a corporate PAN, 116 for a non-corporate PAN), and the assessment year is pre-filled as 2026-27 whatever year the asset belongs to. A payment under the wrong minor head cannot be corrected or refunded.
- Payment time: within two months from the end of the month in which Form 2 is received. A further two months is allowed with interest at 1% a month or part of a month. If the amount is still unpaid, the declaration is void and treated as never made.
- Form 3 and Form 4: after paying, Form 3 (intimation of payment) is filed with proof, within 4 months from the end of the month in which Form 2 is issued. The department then issues Form 4 certifying the payment, within one month from the end of the month in which it receives Form 3.
A timeline estimate for a declaration filed on the last day, 31 December 2026: Form 2 could come any time up to 31 January 2027. If it arrives in January, payment is due by 31 March 2027, or by 31 May 2027 with interest. On the ₹2,44,000 combined example, two months' interest would be ₹2,44,000 × 1% × 2 = ₹4,880.
If you'd rather have a CA file it (useful with capital gains, foreign assets or a notice), paid services such as TaxBuddy do assisted filing; the e-Filing portal route costs nothing. (affiliate link: PaisaTools may earn if you sign up; it doesn't change what we write)
After the scheme: Schedule FA in later returns
The scheme deals with the past; later returns still carry the reporting duty. The department's guide says a resident must disclose in Schedule FA all foreign assets or accounts in which they are a legal owner, beneficial owner or beneficiary, and report foreign income in Schedule FSI. It adds that Schedule FA need not be completed by someone who is not ordinarily resident or non-resident. Three more points from the same guide:
- ITR-1 and ITR-4 have no Schedule FA, so a resident with foreign assets cannot report them in those forms.
- Schedule FA works on the calendar year ending 31 December, not the April-to-March year. For assessment year 2025-26 that was 1 January to 31 December 2024. An asset held at any time during that calendar year is reported, even if it was sold before 31 December.
- Values are converted at the State Bank of India's telegraphic transfer buying rate on the relevant date: the date of peak balance, the date of investment, or 31 December.
This post is for education only and is not tax advice. Whether a declaration applies, in which category and at what value depends on each person's residential status and records for each year.
Frequently asked questions
- What is the last date for FAST-DS?
- Form 1 declarations can be filed from 16 August 2026 to 31 December 2026, according to the Income Tax Department's Form 1 user manual. Payment follows later, within two months from the end of the month in which the Form 2 order is received.
- How much is payable for RSUs not shown in Schedule FA?
- Section 133, Table Sl. No. 2 charges a fee of ₹1,00,000 for foreign assets acquired from income already offered to tax, or earned while a non-resident, but not shown in the schedule, where such assets are worth no more than ₹5 crore. The Act does not name RSUs; treating payroll-taxed RSUs as this category is our reading of the Table's wording.
- What if the foreign income was never taxed?
- That falls under Table Sl. No. 1: 30% tax on the undisclosed foreign income and on the fair market value of any undisclosed foreign asset, plus an equal amount, 60% in total. The asset value and income together must not exceed ₹1 crore.
- Is the FAST-DS payment refundable?
- No. The Finance Bill, 2026 (clause 122 as introduced) says no amount paid under the scheme is refundable, and the department's FAQ says a payment under the wrong minor head of challan ITNS 289 cannot be corrected or refunded.