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Budget 2026 Explained: New Foreign Asset Disclosure Scheme 2026; Who Should Declare And Why?
The Foreign Assets Of Small Taxpayers Disclosure Scheme, 2026: The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ('the Act') was introduced to tackle the issue of unreported foreign income / offshore assets held by Indian residents.
Earlier, the government had offered a one-time disclosure window between 1 July 2015 and 30 September 2015, allowing taxpayers to voluntarily report foreign assets acquired up to 31 March 2015 by paying the required tax and penalty.
Despite these measures, instances of non-compliance have continued, especially among small taxpayers (such like students, young professionals, tech employees, relocated NRIs, and such others), whose omissions are often inadvertent. Such cases typically result from limited awareness and not due to deliberate concealment.
"Some of the examples include foreign assets earned through employment-related benefits like Employee Stock Option Plans (ESOPs) or Restricted Stock Units (RSUs), low-value or dormant bank accounts opened during studies abroad, insurance or saving products purchased while residing overseas, and assets retained unintentionally by individuals on temporary foreign assignments," said CA (Dr.) Suresh Surana.
"Further, information shared under the Automatic Exchange of Information (AEOI) framework has highlighted significant gaps in reporting by PAN holders, particularly with respect to foreign financial assets. It was felt that there was a need to have a practical and enabling mechanism to help taxpayers rectify past such reporting mistakes and ensure compliance," CA (Dr.) Suresh Surana further added.
To address these legacy issues and promote voluntary compliance, the government has proposed a time-bound disclosure scheme for foreign assets and foreign-sourced income.
"Under this initiative, taxpayers would be permitted to declare such holdings upon payment of applicable taxes or fees, determined by the nature and source of acquisition. In return, the scheme would provide limited relief from penalty and prosecution under the Black Money Act for matters duly declared. However, cases linked to ongoing prosecution or involving proceeds of crime would be expressly excluded to maintain the integrity of enforcement efforts," commented CA (Dr.) Suresh Surana.
| Sr No. | Type of assets or income | Amount payable | Conditions |
|---|---|---|---|
| 1 | (a) Undisclosed asset located outside India; or (b) undisclosed foreign income. | Aggregate of,- (i) tax at the rate of 30% of the value of the undisclosed asset located outside India as on the 31st March, 2026; (ii) tax at the rate of 30% of the undisclosed foreign income; and (iii) an amount equal to 100% of tax determined in clauses (i) and (ii). | The aggregate value of the undisclosed asset located outside India and the undisclosed foreign income does not exceed Rs. 1 crore. |
| 2 | (a) Asset located outside India acquired from income accruing or arising outside India, by an assessee, during the period in which such assessee was a non-resident, but such assets were not declared by him in the relevant Schedule in the return of income on becoming a resident; or | A fee of one lakh rupees. | The value of the asset located outside India does not exceed Rs. 5 crores. |
| (b) asset located outside India acquired from income which has been offered to tax under the Income-tax Act, 1961 (43 of 1961) by the assessee, but such assets were not declared by him in the relevant Schedule in the income. |
This proposed scheme will be introduced through the Finance Bill, 2026 and will take effect from a date to be notified by the Central Government. The Finance Minister mentioned in her budget speech that this scheme would be a one-time 6 month foreign asset disclosure scheme.
By offering a structured and temporary opportunity for regularization, the initiative aims to strengthen compliance, reduce litigation, and reinforce a fair and transparent tax environment.
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