Modi government launches special disclosure scheme for foreign assets, income
What's the story
The Indian government has launched a special disclosure scheme for taxpayers to declare specific foreign assets and undisclosed income. The "Foreign Assets of Small Taxpayers Disclosure Scheme Rules, 2026," was announced yesterday and will be effective from August 16. Eligible taxpayers can file electronic declarations until December 31, 2026, under two categories with different eligibility thresholds of ₹1 crore and ₹5 crore.
Categories explained
Two categories for declaring foreign assets
The scheme has two categories for declaring assets. The first category is for undisclosed assets and income worth up to ₹1 crore.
Taxpayers opting for this route have to pay 60% of the declared value, divided equally between tax and penalty.
The second category is for certain specified foreign assets worth up to ₹5 crore, including those acquired from income earned abroad while being a non-resident but not reported after becoming resident or those already offered to tax in India.
Fee structure
₹5cr threshold applies to aggregate value of eligible assets
For the second category, a flat fee of ₹1 lakh is applicable, subject to conditions prescribed under the Finance Act, 2026.
However, it's important to note that this isn't a blanket amnesty for undisclosed foreign wealth.
The ₹5 crore threshold applies to the aggregate value of eligible assets.
For instance, if you have foreign mutual funds worth ₹2.5 crore and overseas securities worth ₹4 crore, your total would be ₹6.5 crore, making you ineligible for this route.
Liability illustration
Example under ₹1cr category
Under the ₹1 crore category, an example is given of a taxpayer with an undisclosed foreign bank account worth ₹60 lakh and undisclosed foreign income of ₹20 lakh.
The resulting liability would be ₹48 lakh, ₹24 lakh as tax and an equal amount as penalty.
The government has fixed March 31, 2026, as the valuation date for these assets.
Valuation guidelines
Detailed rules for valuing foreign assets, currencies
The scheme also provides detailed rules for valuing foreign bank accounts, immovable property, jewelry, artwork, and quoted/unquoted securities.
It also prescribes methods for converting foreign-currency values into rupees.
Declarations have to be filed electronically in Form 1 by December 31, 2026, as the deadline.
After payment and fulfillment of prescribed conditions, taxpayers can get certification of their declaration and immunity from further tax under the Black Money law.