India opens a limited disclosure window for certain foreign assets and income

India has notified the Foreign Assets of Small Taxpayers - Disclosure Scheme Rules, 2026, under Chapter IV of the Finance Act, 2026. The Rules came into force on 16 August 2026.

The Scheme is a one-time voluntary disclosure mechanism for eligible taxpayers with certain undisclosed foreign assets, undisclosed foreign income, or foreign assets that were not disclosed in the relevant income-tax return schedule. The deadline for filing a declaration is 31 December 2026.

Who may use the Scheme?

Eligibility depends on the statutory definition of "assessee" and the nature of the asset or income. It may cover a person who was resident in India in the relevant previous year. It may also extend to a non-resident or RNOR who was resident in India in the year in which the relevant foreign income was earned or the foreign asset was acquired.

The Scheme can be relevant where a person did not file a return, did not disclose the relevant asset or income in a return filed before commencement, or where the relevant asset or income escaped assessment.

Two disclosure routes

The Scheme distinguishes between two categories.

The first concerns an undisclosed asset located outside India or undisclosed foreign income that was not offered to tax. The combined value of the relevant foreign asset and foreign income must not exceed INR 1 crore. The amount payable is 30% tax, together with an additional amount equal to that tax. In effect, the prescribed payment is 60% of the relevant declared value.

The second concerns an overseas asset that was acquired from income earned while the taxpayer was non-resident, or from income that had already been offered to tax in India, but was not disclosed in the relevant return schedule. The aggregate value of the overseas assets in this category must not exceed INR 5 crore. The prescribed fee is INR 1 lakh.

These thresholds are aggregate thresholds. A taxpayer should therefore consider all assets and income proposed to be declared within the relevant category, rather than viewing each asset in isolation.

Valuation and filing

The valuation date is 31 March 2026. The Rules prescribe asset-specific valuation methods. For most assets — such as jewellery, artistic work, immovable property, shares and securities — fair market value is generally the higher of acquisition cost and the relevant open-market value, subject to detailed asset-specific rules. Foreign bank accounts and interests in a foreign partnership, association of persons or LLP are valued differently: a bank account's value is broadly the sum of deposits made into it (subject to specified exclusions), while a partnership-type interest is valued as the assessee's allocated share of the entity's net assets.

The declaration must be filed electronically in Form 1. Supporting acquisition or income documents must be uploaded, together with a valuation report where a valuation has been undertaken.

After verification, the income-tax authority issues an electronic order in Form 2 specifying the amount payable. Payment is ordinarily due within two months from the end of the month in which that order is received. A further limited payment period is available with simple interest at 1% for every month or part of a month of delay. The declarant must then submit payment details and proof electronically in Form 3. A valid declaration and payment are certified in Form 4.

Important limits and exclusions

The Scheme is not available for income or assets representing proceeds of crime where proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002. It is also unavailable for income or assets relating to an assessment year for which assessment proceedings have already been completed under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

A valid declaration may result in the statutory protection provided under the Scheme from further tax, penalty and prosecution under the Black Money Act in respect of the declared asset or income. That protection is conditional, not automatic.

The Scheme may offer a meaningful compliance route in appropriate cases, but its eligibility, valuation, disclosure and payment provisions need careful assessment before a declaration is made.

This article is based on information procured from official sources and public portals. It is provided for general informational purposes and does not constitute legal or immigration advice. Kindly consult the relevant public authority or an immigration advisor at the Legit Migrant for guidance specific to your circumstances.