CBDT has notified the Foreign Assets of Small Taxpayers - Disclosure Scheme Rules, 2026, setting out valuation and procedural requirements for the one-time voluntary disclosure scheme. The scheme took effect on 16 August 2026, and allows eligible taxpayers to file declarations until 31 December 2026.
The Indian Central Board of Direct Taxes (CBDT) Ministry of Finance, notified the Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026 on 14 August 2026, under Section 143 of the Finance Act, 2026.
The rules provide the procedural and valuation framework for the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS), introduced through Chapter IV, sections 130 to 144 of the Finance Act, 2026.
The scheme takes effect from 16 August, 2026. The valuation date for foreign assets covered by declarations is 31 March 2026, while the last date for filing a declaration is 31 December 2026.
Two categories of taxpayers
FAST-DS divides eligible declarations into two categories, depending on the nature of the foreign assets or income being disclosed.
Category 1, under Serial No. 1, covers undisclosed assets located outside India and undisclosed foreign income. The combined aggregate fair market value (FMV) of the declared assets and income must not exceed INR 1 crore.
A declarant under this category is required to pay tax at 30% of the declared asset and income value, together with a penalty equal to 100% of the tax amount. The combined payment therefore represents 60% of the total declared value.
Category 2, under Serial No. 2, covers foreign assets acquired during periods when the declarant was a non-resident using foreign income, or assets acquired from income already offered to tax in India but not reported in the relevant schedule of the Indian tax return after the individual became a resident.
The aggregate FMV of assets declared under Category 2 must not exceed INR 5 crore. A flat fee of INR 1 lakh applies, with no tax or penalty being levied.
Taxpayers whose assets or income exceed the applicable thresholds are not eligible to use FAST-DS.
Rules for determining FMV
Rule 3 establishes separate methods for determining the FMV of different types of foreign assets as at 31 March 2026.
For bank accounts, FMV is based on the sum of all deposits made from the date the account was opened up to the valuation date. Where an account had previously been declared under Chapter VI of the Black Money Act, 2015, only deposits made from the date of that declaration are considered. Deposits made from withdrawals from the same account are excluded.
For bullion, jewellery and precious stones, FMV is the higher of the acquisition cost or the open market price on 31 March 2026, based on verification by a valuer recognised by the government of the jurisdiction where the asset is located. Where no foreign valuer’s report is obtained, the indexed cost of acquisition is treated as the FMV.
The same approach applies to archaeological collections and works of art.
For quoted shares and securities, the higher of the acquisition cost or the average of the lowest and highest prices quoted on an established securities market on March 31, 2026, is used. If there was no trading on that date, the average quoted price on the immediately preceding trading day applies.
For unquoted equity shares, FMV is the higher of the acquisition cost or the value determined on 31 March 2026, using the prescribed book-value formula. The formula takes into account the book value of non-excluded assets, the FMV of specified assets, book liabilities, paid-up value and total paid-up equity share capital. Where the prescribed formula is not applied, the indexed cost of acquisition is used.
For immovable property, FMV is the higher of the acquisition cost or the open market price on the valuation date, certified by a recognised valuer in the country where the property is situated. Without a valuer’s report, the indexed cost of acquisition applies.
For other assets, the higher of the acquisition cost or investment and the arm’s-length open market selling price on the valuation date is considered. Where this valuation is unavailable, the indexed cost of acquisition applies.
Rules for transferred and reinvested assets
The rules also provide specific treatment where assets have been transferred before 31 March 2026. For an asset other than a bank account, FMV is the higher of its acquisition cost or sale price. Where the asset was transferred without consideration or for inadequate consideration, the higher of the acquisition cost or FMV on the transfer date is used.
Where proceeds from the sale of an old asset or a withdrawal from a bank account are reinvested in a new asset, the FMV of the old asset or bank account is reduced by the amount reinvested in the new asset.
Currency conversion also follows prescribed rules. Assets denominated in RBI-permitted currencies are converted using the RBI reference rate on the valuation date. Assets denominated in other currencies are first converted into USD using the exchange rate specified by the central bank of the jurisdiction where the asset is located and then converted into INR using the RBI reference rate on the valuation date.
Four-stage electronic process
The FAST-DS compliance process is carried out electronically through four mandatory forms.
Form 1 is the declaration through which the taxpayer provides details of foreign assets and income, including PAN, passport details for non-residents, asset descriptions and consolidated FMV calculations.
Following submission, the prescribed income-tax authority reviews the declaration and issues Form 2, specifying the tax, penalty or fee payable.
The declarant then makes the required payment electronically and submits proof of payment through Form 3, together with any interest where applicable.
Within one month from the end of the month in which Form 3 is submitted, the tax authority issues Form 4, certifying the validity of the declaration and payment. This certification provides immunity from further tax, penalty and prosecution under the Black Money Act, 2015.
Payment deadline and interest
The amount specified in Form 2 must generally be paid within two months from the end of the month in which the order is received. This period is interest-free.
If payment is made after the initial two-month period, interest at 1% per month or part thereof is charged on the outstanding amount. Payment can be made during an additional period, subject to a maximum of four months from the end of the month in which the Form 2 order was issued.
Failure to make payment within the maximum period results in the loss of the scheme’s benefits. The declaration is then treated as void and deemed never to have been made.
20% protection for valuation differences
The rules provide a 20% valuation cushion for declarants. Where the FMV declared in Form 1, excluding bank accounts, differs from the value determined by the Assessing Officer during an inquiry, the declaration is not invalidated for misrepresentation or suppression of facts where the difference does not exceed 20% of the declared FMV.
The FAST-DS rules therefore establish the valuation methods, eligibility thresholds, payment requirements and electronic procedures that taxpayers must follow to make use of the one-time voluntary disclosure scheme before the 31 December, 2026 deadline.
