Foreign Assets of Small Taxpayers Disclosure Scheme 2026

The Government of India has introduced the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FADS 2026) to provide an opportunity to eligible taxpayers to disclose certain foreign assets and foreign income that were not properly disclosed earlier.

The scheme is particularly relevant for Indian taxpayers who may have:

• A foreign bank account

• Foreign shares or securities

• Property outside India

• Foreign investments

• Foreign income that was not reported in India

• Foreign assets that were acquired earlier but were not disclosed in the relevant income tax return

The scheme provides a time-bound disclosure window from 16 August 2026 to 31 December 2026. Eligible taxpayers can make the declaration electronically through the Income Tax e-Filing portal by filing Form 1 of FADS 2026.

This article explains the Foreign Assets of Small Taxpayers Disclosure Scheme 2026, eligibility, types of assets covered, tax and fee payable, forms, deadline, online filing process, examples and important FAQs.

What Is the Foreign Assets of Small Taxpayers Disclosure Scheme 2026?

The Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 is a one-time, time-bound disclosure mechanism introduced through the Finance Act, 2026.

It allows eligible taxpayers to disclose certain:

• Undisclosed foreign assets

• Undisclosed foreign income

• Undeclared foreign assets

by paying the prescribed tax or fee.

The scheme is designed to provide eligible taxpayers an opportunity to regularise specified foreign asset or income disclosures instead of continuing with an undisclosed position.

The Income Tax Department's official guidance states that taxpayers making a valid declaration and payment can receive immunity from further tax, penalty and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, subject to the prescribed conditions.

When Is the Foreign Assets Disclosure Scheme 2026 Applicable?

The disclosure window is:

16 August 2026 to 31 December 2026

The last date for filing a declaration under the scheme is:

31 December 2026

The Income Tax Department has stated that a declaration cannot be filed after this deadline.

Therefore, taxpayers who believe that they have an eligible foreign asset or foreign income that was not properly disclosed should examine their position well before the deadline.

Why Has the Government Introduced This Scheme?

Foreign financial information is increasingly being exchanged between countries under international information-sharing arrangements.

The Income Tax Department has also introduced a Foreign Assets Information facility on the e-Filing portal, allowing eligible taxpayers to view certain overseas financial information received from foreign jurisdictions.

This makes accurate disclosure of foreign assets increasingly important.

For example, a taxpayer may have:

• A foreign bank account

• Shares in a foreign company

• Foreign securities

• Overseas property

• Foreign investment income

and may not have correctly reported the asset or income in the applicable tax return.

FADS 2026 provides a specific time-bound mechanism for eligible taxpayers to make certain disclosures.

Who Can Use the Foreign Assets Disclosure Scheme 2026?

The official Form 1 guidance provides specific eligibility conditions.

The scheme can apply to a person who:

1. Was a resident in India under section 6 of the Income-tax Act, 1961, during the relevant previous year; or

2. Was a non-resident or Resident but Not Ordinarily Resident (RNOR) during the relevant previous year, but was resident in India either:

   • in the previous year to which the undisclosed foreign income relates, or

   • in the previous year in which the undisclosed foreign asset was acquired.

Eligibility should be examined carefully because the scheme is not a general amnesty available automatically to every person with a foreign asset.

What Is an Undisclosed Foreign Asset?

For the purpose of the scheme, an undisclosed asset located outside India generally refers to an asset, including a financial interest in an entity, located outside India and held by the taxpayer or beneficially owned by the taxpayer where the source of investment has not been satisfactorily explained.

Examples can include:

• Foreign bank accounts

• Foreign property

• Foreign shares

• Foreign securities

• Jewellery located outside India

• Other overseas assets

The official Form 1 system specifically provides categories for bank accounts, immovable property, jewellery, artistic work, shares and securities and other assets.

What Is Undisclosed Foreign Income?

Undisclosed foreign income refers to income from a source located outside India that was chargeable to tax in India but was not offered to tax.

For example, an eligible Indian resident may have received taxable interest from a foreign bank account but failed to include that income in the applicable Indian income tax return.

Another example could be foreign investment income that was taxable in India but was not reported.

Whether a particular income qualifies under FADS 2026 depends on the detailed facts and conditions prescribed under the scheme.

What Types of Foreign Assets Can Be Disclosed?

The FADS 2026 Form 1 provides several categories for reporting foreign assets and income.

Foreign Bank Account

A foreign bank account can be disclosed through the relevant section of Form 1.

The form can require information such as:

• Name of the bank

• Address of the bank

• Account holder details

• Account number

• Relevant valuation information

The official user manual specifically includes Bank Account as asset category A1.

Foreign Immovable Property

Foreign property can include:

• House

• Apartment

• Land

• Commercial property

• Other immovable property outside India

Where applicable, supporting valuation documentation may need to be provided.

Foreign Jewellery

Foreign jewellery is also included among the asset categories provided in the disclosure form.

Artistic Work

Artistic work located outside India is another category included in the prescribed annexures.

Foreign Shares and Securities

The scheme's Form 1 specifically includes shares and securities.

This can be relevant to taxpayers holding investments in foreign companies or other overseas securities.

Other Foreign Assets

The form also contains a category for any other asset that falls within the applicable disclosure provisions.

Can Foreign Income Also Be Disclosed?

Yes.

FADS 2026 does not only deal with foreign assets.

The prescribed form also includes a category for undisclosed foreign income.

The taxpayer may need to provide details of:

• Nature of income

• Source of income

• Amount

• Relevant period

• Related foreign assets, where applicable

The official Form 1 manual includes an income category in the relevant annexures.

What Is the ₹1 Crore Limit Under FADS 2026?

One of the most important features of the scheme is the separate treatment of certain declarations involving an aggregate value of up to ₹1 crore.

For the relevant category covering an undisclosed foreign asset or undisclosed foreign income, the aggregate value must not exceed ₹1 crore.

For this category, the prescribed amount payable is effectively 60% of the applicable value, consisting of:

• 30% tax; and

• an amount equal to that tax.

The Income Tax Department's Form 1 guidance describes this as tax of 30% plus an additional amount equal to the tax paid.

Example

Suppose an eligible taxpayer has an applicable undisclosed foreign asset valued at:

₹20 lakh

Tax at 30%:

₹6 lakh

Additional amount equal to the tax:

₹6 lakh

Total amount payable:

₹12 lakh

Therefore, the effective amount payable for this category is 60% of the applicable value.

Taxpayers should not assume that the calculation will always be based simply on the original purchase price. The prescribed valuation rules and the information required in Form 1 should be considered.

What Is the ₹5 Crore Limit Under FADS 2026?

A separate category applies to certain foreign assets that were:

• acquired from income earned outside India while the taxpayer was a non-resident but were not subsequently disclosed after becoming resident; or

• acquired from income that had already been offered to tax under the Income-tax Act, 1961, but the foreign asset itself was not disclosed in the relevant return schedule.

For this category, the aggregate value can be up to:

₹5 crore

The prescribed amount payable is:

₹1 lakh

subject to the conditions of the scheme.

This distinction is extremely important because the ₹1 crore and ₹5 crore limits apply to different categories of declarations.

Difference Between the ₹1 Crore and ₹5 Crore Categories

The exact category should be determined based on the origin of the asset, tax treatment of the underlying income and the taxpayer's residential status.

How Does FADS 2026 Work?

The process involves multiple stages.

Step 1: File Form 1

The taxpayer files Form 1 electronically through the Income Tax e-Filing portal.

Form 1 contains the declaration of the relevant foreign asset or income.

Step 2: Income Tax Department Determines the Amount Payable

The prescribed Form 2 is issued by the tax authorities determining the amount payable.

According to the official timeline, Form 2 is to be issued within one month from the end of the month in which Form 1 is submitted.

Step 3: Make the Payment

After Form 2 is issued, the taxpayer is required to make the applicable payment.

The prescribed Form 3 is used for intimation of payment.

The payment timeline is within four months from the end of the month in which Form 2 is issued.

Step 4: Obtain Validity Certificate

After the required payment and compliance, the tax authorities issue Form 4 certifying the validity of the declaration and payment.

The prescribed timeline for Form 4 is within one month from the end of the month in which Form 3 is submitted.

FADS 2026 Forms Explained

The scheme uses four important forms.

The taxpayer primarily begins the process by filing Form 1.

How to File FADS 2026 Form 1 Online

The Income Tax Department has provided an online filing process.

Step 1: Login to the Income Tax Portal

Visit the official Income Tax e-Filing portal and log in using your PAN and applicable credentials.

A valid PAN registered on the e-Filing portal is required.

Step 2: Go to Income Tax Forms

From the dashboard, navigate to:

e-File → Income Tax Forms → File Income Tax Forms

Step 3: Find FADS 2026

Under the relevant category of forms, locate:

FOREIGN ASSETS OF SMALL TAXPAYERS' DISCLOSURE SCHEME 2026

Then select:

Form 1 of FADS 2026

and click File Now.

Step 4: Start the Form

After opening Form 1, review the pre-filled information and click:

Let's Get Started

Form 1 contains multiple sections and annexures depending on the type of asset or income being declared.

What Information Is Required in Form 1?

The taxpayer may need to provide detailed information about the foreign assets or income.

The form contains sections covering:

• Basic taxpayer information

• Foreign asset details

• Foreign income details

• Bank accounts

• Immovable property

• Jewellery

• Artistic work

• Shares and securities

• Other assets

• Valuation information

• Supporting documents

• Verification

The exact fields displayed depend on the type of declaration selected by the taxpayer.

What Documents May Be Required?

The official user manual states that taxpayers should have complete details of the foreign asset or income being declared.

Depending on the asset, supporting documents may include:

• Bank account information

• Passport details

• Valuation reports

• Property documents

• Investment statements

• Shareholding statements

• Computation of income/value

• Other supporting evidence

The portal permits specified PDF or ZIP attachments subject to the prescribed file-size limits.

Taxpayers should keep supporting documentation carefully because foreign asset valuation and source-of-funds questions can be fact-specific.

How Are Foreign Assets Valued?

Valuation is an important part of FADS 2026.

The form includes a mechanism for calculating the aggregate value of the assets according to the applicable rules.

For example, the form can capture:

• Fair market value

• Foreign asset details

• Foreign income

• Relevant dates

• Supporting valuation documents

The system then uses the entered information to calculate the relevant aggregate values and amount payable.

Because valuation can differ depending on the nature of the asset, taxpayers should avoid assuming that the original purchase price is always the applicable value.

What Happens After Filing Form 1?

After completing the applicable sections:

1. Review all information.

2. Preview the form.

3. Download/save a copy if required.

4. Complete e-Verification.

5. Submit the form.

The official user manual states that e-Verification can be completed using available verification methods such as Aadhaar-registered mobile OTP, Digital Signature Certificate or applicable EVC methods through a bank or demat account.

Can the Declaration Be Filed After 31 December 2026?

The prescribed declaration window ends on:

31 December 2026

The Income Tax Department's official guidance states that the declaration cannot be filed after this date.

Therefore, eligible taxpayers should not wait until the last day, particularly where foreign asset valuation or supporting documents are required.

What Happens If Foreign Assets Are Not Disclosed?

Foreign asset disclosure is a serious tax-compliance matter.

A taxpayer who has foreign assets or foreign income should first determine:

• Whether the asset was required to be disclosed

• Whether the taxpayer was resident in India

• Whether the relevant income was taxable in India

• Whether the asset was properly reported in the ITR

• Whether the asset appears in available foreign-asset information

• Whether FADS 2026 is applicable

The consequences of non-disclosure can depend on the specific facts and applicable law.

The FADS 2026 mechanism is therefore particularly relevant for eligible taxpayers who want to regularise qualifying historical foreign asset or income disclosures.

What Is the Foreign Assets Information Report?

The Income Tax Department has also introduced a Foreign Assets Information (FAI) facility on the e-Filing portal.

The facility allows eligible taxpayers to view certain foreign financial information received from overseas jurisdictions through international information-sharing mechanisms.

This can help taxpayers compare the information available with their own records.

For example, a taxpayer may discover information relating to:

• Foreign financial accounts

• Overseas investments

• Foreign securities

• Other reportable financial information

Taxpayers should verify the information carefully rather than assuming that every entry automatically represents taxable income.

FADS 2026 and FATCA

FATCA stands for the Foreign Account Tax Compliance Act.

It is part of the international framework through which financial information relating to certain accounts and taxpayers can be exchanged.

Foreign financial information received by Indian authorities can therefore become relevant to the taxpayer's compliance and reporting obligations.

If a taxpayer has a foreign financial account, investment or income, they should maintain proper documentation and verify whether disclosure is required under Indian tax law.

FADS 2026 and CRS

CRS refers to the Common Reporting Standard.

It is another international framework for the automatic exchange of financial account information between participating jurisdictions.

Information received through international exchange mechanisms can assist tax authorities in identifying foreign financial assets and accounts.

The availability of foreign asset information on the Indian e-Filing portal makes it increasingly important for taxpayers to reconcile their overseas assets with their Indian tax records.

Example 1: Foreign Bank Account of ₹20 Lakh

Suppose an eligible taxpayer has an undisclosed foreign bank account with an applicable value of ₹20 lakh and the case falls under the category subject to 60% payment.

Calculation:

Foreign asset value = ₹20 lakh

30% tax = ₹6 lakh

Additional amount equal to tax = ₹6 lakh

Total = ₹12 lakh

Thus, the amount payable would be ₹12 lakh, subject to the scheme's applicable provisions and valuation rules.

Example 2: Foreign Property Acquired While Non-Resident

Suppose a person was non-resident when they acquired a foreign property using income earned outside India.

Later, after becoming resident in India, the person did not disclose the foreign property in the relevant return schedule.

If the case satisfies the specific conditions of the ₹5 crore category, the prescribed amount payable may be a flat ₹1 lakh, subject to the scheme's conditions.

Example 3: Foreign Shares Bought From Income Already Taxed in India

Suppose a taxpayer acquired foreign shares using income that had already been offered to tax in India.

However, the taxpayer failed to disclose the foreign shares in the applicable foreign-asset schedule.

If the case falls within the relevant category and all prescribed conditions are satisfied, the ₹1 lakh fee framework may apply where the aggregate value is within the ₹5 crore limit.

Important Difference: Undisclosed Income vs Undeclared Asset

These two situations should not be confused.

Undisclosed foreign income

This refers to foreign-source income that was taxable in India but was not offered to tax.

Undeclared foreign asset

This can refer to an overseas asset that was not properly disclosed even though the underlying income used to acquire it may have already been taxed.

The distinction matters because FADS 2026 contains separate categories and payment mechanisms.

Is FADS 2026 an Amnesty Scheme?

The scheme provides a specific opportunity for eligible taxpayers to make qualifying disclosures and obtain the prescribed immunity, subject to the conditions of the law.

However, taxpayers should not interpret it as a blanket amnesty for every foreign asset or every historical tax issue.

The eligibility conditions, asset categories, valuation rules and payment requirements must be satisfied.

What Should Taxpayers Do Before Filing FADS 2026?

Before filing the declaration, taxpayers should prepare a complete list of their foreign assets and income.

Important records may include:

• Foreign bank statements

• Foreign brokerage statements

• Shareholding statements

• Property documents

• Foreign tax statements

• Dividend statements

• Interest statements

• Exchange-rate records

• Previous ITRs

• Passport/travel records

• Evidence of source of funds

• Valuation documents

Taxpayers should also compare these records with their previously filed Indian tax returns.

FADS 2026 Checklist

Before filing Form 1, check:

• PAN is registered on the Income Tax portal

• Residential status has been correctly determined

• Foreign bank accounts have been identified

• Foreign shares/securities have been identified

• Foreign properties have been identified

• Foreign income has been calculated

• Previous ITRs have been reviewed

• Source of funds has been checked

• Foreign asset valuation has been determined

• Supporting documents are available

• Correct FADS category has been identified

• Form 1 has been reviewed before submission

• E-Verification method is available

• Deadline of 31 December 2026 is noted

Frequently Asked Questions About Foreign Assets Disclosure Scheme 2026

What is FADS 2026?

FADS 2026 stands for Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026. It provides eligible taxpayers a time-bound opportunity to disclose specified undisclosed foreign assets, foreign income or undeclared foreign assets by paying the prescribed amount.

What is the last date for FADS 2026?

The last date for filing a declaration is 31 December 2026. The disclosure window began on 16 August 2026.

Who can use FADS 2026?

The scheme can apply to eligible residents and certain non-residents/RNORs who satisfy the residential-status conditions specified under the scheme.

Can foreign bank accounts be disclosed?

Yes. Foreign bank accounts are specifically included as an asset category in the prescribed Form 1 annexures.

Can foreign shares be disclosed?

Yes. Shares and securities are specifically included among the foreign asset categories in Form 1.

Can foreign property be disclosed?

Yes. Immovable property located outside India is one of the categories covered by the Form 1 disclosure mechanism.

What is the ₹1 crore limit?

For the relevant category covering undisclosed foreign assets or undisclosed foreign income, the aggregate value must not exceed ₹1 crore.

What is the ₹5 crore limit?

The ₹5 crore limit applies to certain specified undeclared foreign assets, including assets acquired during a non-resident period or assets acquired from income already offered to tax, subject to the conditions of the scheme.

How much tax is payable under the ₹1 crore category?

The prescribed calculation consists of 30% tax plus an additional amount equal to that tax, effectively making the total 60% of the applicable value.

How much fee is payable under the ₹5 crore category?

For the relevant category, the prescribed amount is ₹1 lakh, subject to the conditions and limits specified under the scheme.

Which form is used to declare foreign assets?

The taxpayer starts the FADS 2026 process by filing Form 1 electronically.

What are Form 2, Form 3 and Form 4?

Form 2 determines the amount payable, Form 3 provides intimation of payment and Form 4 certifies the validity of the declaration and payment.

Can I file FADS 2026 offline?

The prescribed process for Form 1 is online through the Income Tax e-Filing portal.

Can I disclose a foreign bank account that I forgot to report in my ITR?

Potentially, if the case satisfies the eligibility and other conditions of FADS 2026. Taxpayers should examine the relevant facts, residential status, source of funds and previous ITR disclosures before filing.

What if my foreign asset information already appears on the Income Tax portal?

Taxpayers should compare the information available through the Foreign Assets Information facility with their own records and previous ITR disclosures. The appearance of information on the portal does not by itself determine the complete tax treatment of the asset.

Is there immunity after making a valid FADS declaration?

The Income Tax Department states that taxpayers making a valid declaration and payment can receive immunity from further tax, penalty and prosecution under the Black Money Act, subject to prescribed conditions.

Final Takeaway

The Foreign Assets of Small Taxpayers Disclosure Scheme 2026 provides a time-bound opportunity for eligible taxpayers to address certain historical foreign asset and foreign income disclosure issues.

The most important dates and figures are:

• Scheme begins: 16 August 2026

• Last date for declaration: 31 December 2026

• Form used: Form 1

• Relevant undisclosed asset/income category: Up to ₹1 crore

• Amount for that category: 30% tax + equal additional amount, effectively 60%

• Certain undeclared foreign asset category: Up to ₹5 crore

• Amount for that category: ₹1 lakh

• Process: Online through the Income Tax e-Filing portal

• Potential immunity: Subject to valid declaration, payment and prescribed conditions

The scheme should not be treated as a blanket solution for every foreign asset or tax issue. Residential status, source of funds, nature of the asset, valuation, previous ITR disclosures and the specific category under FADS 2026 can materially affect the outcome.

Taxpayers with foreign assets or foreign income should therefore review their records carefully before making a declaration and consider professional tax advice where the facts are complex.