Introduction
With increasing international mobility, many Indians now work, study or conduct business outside India and may hold foreign bank accounts, shares, securities, insurance policies or other overseas assets. While many such assets are acquired legitimately, taxpayers may sometimes fail to report them correctly in their Indian income-tax returns due to lack of awareness, inadvertent errors or changes in residential status.To address certain such cases, the Government of India has introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS). The scheme provides eligible taxpayers with a one-time opportunity to voluntarily disclose specified foreign assets and foreign income by making the prescribed tax or fee payment. It also provides specified immunity from further tax, penalty and prosecution under the Black Money Act for matters covered by a valid declaration, subject to the conditions of the scheme.
The scheme is particularly relevant for taxpayers with relatively small foreign assets or legacy non-disclosures, including certain returning NRIs, employees holding foreign ESOPs or RSUs, and individuals with dormant foreign bank accounts.
What is the FAST-DS Scheme 2026?
FAST-DS stands for Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026. It was introduced under Chapter IV (sections 130 to 144) of the Finance Act, 2026, read with the FAST-DS Rules, 2026, to provide eligible taxpayers an opportunity to disclose specified foreign assets and foreign income that were not properly disclosed or taxed, subject to prescribed conditions.The scheme is designed as a one-time compliance opportunity rather than a permanent disclosure facility.
The declaration window is from 16 August 2026 to 31 December 2026.
Practical example
If the individual satisfies the conditions of FAST-DS, the scheme may provide a route to regularise the eligible past non-disclosure.
Why was FAST-DS introduced?
The Government identified certain cases involving legacy or inadvertent non- disclosure of relatively small foreign assets and income. These may include:● Foreign ESOPs or RSUs received by employees
● Dormant or low-balance foreign bank accounts
● Foreign savings or insurance policies held by returning residents
● Foreign assets acquired while working or studying abroad
● Foreign assets that were acquired from income already offered to tax in India
The Government's explanatory memorandum specifically identifies such cases as examples of non-compliance the scheme is intended to address. The scheme therefore provides a limited compliance window for eligible taxpayers rather than requiring every case to be treated in the same manner as a deliberate concealment.
Who Can Use the FAST-DS Scheme?
The scheme is available to a person who is or was a resident in India during the relevant period, subject to the conditions prescribed under the scheme.Importantly, a person who is currently an NRI or RNOR may also potentially qualify if they were resident in India during the relevant period when the foreign income arose or the foreign asset was acquired. Current residential status alone does not determine eligibility.
Practical example
● 2019–2023: Resident in India
● 2024 onwards: Working in the UK and treated as a Non-Resident
● She has a foreign asset relating to a period when she was resident in India that was not properly disclosed.
Her current NRI status does not automatically make her ineligible. Her residential status during the relevant period and the other FAST-DS conditions would need to be examined.
What Foreign Assets and Income Can Be Disclosed?
The scheme covers specified categories of:● Undisclosed foreign income
● Undisclosed assets located outside India
● Certain specified foreign assets acquired from foreign income while the taxpayer was a Non-Resident but not reported after becoming resident
● Certain foreign assets acquired from income that had already been offered to tax in India but were not disclosed in the relevant return
The official FAQs cover a wide range of foreign assets, including foreign bank accounts, quoted and unquoted shares and securities, immovable property, bullion and jewellery, artistic works and interests in foreign firms or LLPs.
Two Important Categories Under FAST-DS
The scheme provides different treatment depending on the nature and value of the foreign asset or income. Assets are valued at fair market value as on 31 March 2026 (the valuation date) under the prescribed valuation rules, and all values are converted into Indian Rupees using the RBI reference rate on that date. For assets other than bank accounts, a variance of up to 20% between the declared value and the value later determined by the Assessing Officer will not, by itself, make the declaration invalid.Category 1: Undisclosed Foreign Asset or Foreign Income up to ₹1 Crore
The amount payable consists of:
● Tax at 30% of the value of the undisclosed foreign asset or foreign income; and
● An additional amount equal to that tax.
This effectively results in a payment of 60% of the relevant value, subject to the scheme's valuation and eligibility provisions.
Practical Example
Suppose an eligible taxpayer has an undisclosed foreign asset valued at ₹80 lakh.The calculation would broadly be:
● Tax @ 30% = ₹24 lakh
● Additional amount equal to tax = ₹24 lakh
● Total payable = ₹48 lakh
The actual amount should be determined according to the prescribed provisions and valuation rules.
Category 2: Certain Foreign Assets up to ₹5 Crore
1. The asset was acquired from income accruing or arising outside India while the taxpayer was a Non-Resident and was not disclosed after becoming resident; or
2. The asset was acquired from income that had already been offered to tax in India but the asset was not reported in the relevant foreign-asset schedule.
The aggregate value of the specified foreign assets under this category must not exceed ₹5 crore.
For eligible cases under this category, the prescribed payment is a flat fee of ₹1 lakh.
Practical Example
Suppose Arjun worked in Dubai while he was a Non-Resident and acquired foreign investments from his overseas income. After returning to India and becoming resident, he failed to report those investments in the required foreign-asset disclosure.If the investment falls within the prescribed category and the aggregate value does not exceed ₹5 crore, he may potentially be able to use FAST-DS by paying the prescribed ₹1 lakh fee, subject to all eligibility conditions.
Is FAST-DS Relevant to NRIs?
Yes, FAST-DS can be relevant to certain NRIs and returning NRIs, but being an NRI does not automatically make a person eligible.The important question is the taxpayer's residential status during the relevant period and the source and nature of the foreign asset or income.
For example, a person who acquired a foreign asset while they were Non-Resident and later became resident may have a different compliance situation from someone who acquired an undisclosed foreign asset while they were resident in India.
Therefore, the relevant years and residential status should be carefully reviewed before making a declaration.
How Does the FAST-DS Filing Process Work?
The scheme has a prescribed process involving four forms.Step 1: File Form 1
The taxpayer submits a declaration of the eligible foreign assets or income using Form 1.The declaration period is 16 August 2026 to 31 December 2026.
Step 2: Receive Form 2
The Income Tax Department examines the declaration and determines the amount payable through Form 2.The prescribed timeline is within one month from the end of the month in which Form 1 is submitted.
Step 3: Make the Payment
After receiving Form 2, the taxpayer makes the prescribed payment within two months from the end of the month in which Form 2 is received. If this is missed, payment can still be made within a further two months with simple interest at 1% for every month or part of a month of delay. If payment is not made within this outer limit, the benefit of the scheme is lost for that declaration.The Income Tax Department has prescribed ITNS 289 for payments under FAST-DS. The payment is made through the e-Pay Tax facility on the Income Tax e-filing portal.
Step 4: Submit Form 3
After making the payment, the taxpayer submits Form 3 along with proof of payment (including interest, if any) within the period allowed for payment.Step 5: Receive Form 4
The Income Tax Department subsequently verifies the declaration and payment and issues Form 4, certifying the payment where the prescribed requirements are satisfied. Form 4 is issued within one month from the end of the month in which Form 3 is received.Important FAST-DS Timeline
| Particular Timeline | FAST-DS Declaration Window |
|---|---|
| FAST-DS Declaration Window | 16 August 2026 – 31 December 2026 |
| Form 1 | Filed by taxpayer on or before 31 December 2026 |
| Form 2 | Issued by tax authority within one month from the end of the month in which Form 1 is filed. |
| Form 3 |
Payment and intimation by taxpayer within two months
from the end of the month in which Form 2 is received.
Extendable by two months with 1% monthly interest. |
| Form 4 | Issued by tax authority within one month from the end of the month in which Form 3 is received. |
What is ITNS 289?
ITNS 289 is the challan prescribed for making payments under the FAST-DS Scheme.After submitting a valid Form 1 and receiving Form 2, the taxpayer uses ITNS 289 to make the amount payable under the scheme. The e-filing portal currently pre-fills Assessment Year 2026-27 for these payments, irrespective of the year in which the foreign asset was acquired or foreign income was earned.
The applicable minor head is auto-populated based on the category of PAN (Minor Head 116 for non-corporate PANs and 115 for corporate PANs) and cannot be modified. Taxpayers should still carefully verify the PAN, amount and other payment details before making the payment.
What Benefits Does FAST-DS Provide?
However, this immunity is subject to the conditions and exclusions under the scheme. It should not be understood as a general waiver for every foreign asset or every tax violation. The income or investment declared is also not included in total income under the Income-tax Act or the Black Money Act. However, the declarant cannot claim rectification, revision, set-off or relief in respect of any assessment already made for the declared income or asset.
The scheme does not apply to any income or asset that represents proceeds of crime for which proceedings have been initiated or are pending under the Prevention of Money-laundering Act, 2002, or to any assessment year for which assessment proceedings under the Black Money Act have already been completed.
Documents Taxpayers Should Keep Ready
● PAN details
● Passport and travel history
● Details of residential status for relevant years
● Foreign bank statements
● Foreign investment statements
● ESOP/RSU grant and vesting documents
● Foreign property documents
● Insurance or investment policy documents
● Details of the source of funds
● Previous Indian income-tax returns
● Form 26AS and AIS, where relevant
● Foreign tax records, where applicable
● Supporting documents showing whether income was already offered to tax in India
The exact documents required will depend on the nature of the asset and the category under which the declaration is being made.
Practical Example: Foreign ESOPs
Consider Neha, who worked for a multinational company in India and received ESOPs of its US parent company.She reported the taxable employment benefit when the shares vested but did not disclose the foreign shares separately in the required foreign-asset schedule.
If the facts satisfy the FAST-DS conditions, she may examine whether the scheme can be used to regularise the past non-disclosure.
This example demonstrates why taxpayers should distinguish between taxability of income and foreign-asset reporting requirements. Reporting taxable income does not necessarily eliminate a separate requirement to disclose a foreign asset.
Practical Example: Dormant Foreign Bank Account
Suppose Ravi studied in the United States and opened a US bank account while he was studying there. After returning to India, he retained the account with a small balance but failed to report it in the applicable foreign-asset disclosure.If the account and circumstances fall within the prescribed FAST-DS category, he may examine whether the scheme provides a route for regularisation.
FAST-DS vs Normal Income-Tax Filing
For example:
Situation 1:
An NRI owns a house in Bengaluru and earns ₹6 lakh rent annually.This is primarily an Indian-source income and normal tax-return compliance matter.
Situation 2:
A taxpayer has an eligible foreign bank account or investment that should have been disclosed but was not.This may involve a foreign-asset disclosure issue, and FAST-DS may become relevant if all scheme conditions are satisfied.
Important Points to Remember
1. It is a one-time scheme.
2. The declaration window ends on 31 December 2026.
3. Eligibility depends on the specific conditions of the scheme.
4. Current NRI status does not automatically determine eligibility.
5. The value and source of the foreign asset or income are important.
6. Category 1 and Category 2 have different payment mechanisms.
7. Form 1 must be filed within the prescribed window.
8. ITNS 289 is used for payment after determination through Form 2.
9. The scheme provides specified immunity only for matters covered by a valid declaration and subject to its conditions.
10. Taxpayers should maintain supporting documentation for their declaration.
Conclusion
However, eligibility and the amount payable depend on the nature, source and value of the foreign asset or income and the taxpayer's residential status during the relevant period.
With the declaration window open until 31 December 2026, taxpayers who believe they may have an eligible case should review their past tax returns, foreign assets and supporting documents at the earliest. Professional assistance can also help determine whether FAST-DS applies and which category is relevant.
For professional guidance on FAST-DS, foreign asset disclosure, NRI taxation and income-tax compliance, taxpayers can consult a qualified tax professional who can review their individual circumstances and assist with the prescribed compliance process.
Frequently Asked Questions
1. What is FAST-DS Scheme 2026?
FAST-DS is the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026. It
provides eligible taxpayers with a one-time opportunity to disclose specified foreign
assets and foreign income by making the prescribed tax or fee payment, subject to
the conditions of the scheme.
2. What is the last date to file a FAST-DS declaration?
The declaration can be filed from 16 August 2026 to 31 December 2026.
3. Can an NRI use the FAST-DS Scheme?
Potentially, yes. A person who is currently an NRI or RNOR may qualify if they were
resident in India during the relevant period and satisfy the other conditions of the
scheme. Current NRI status alone does not determine eligibility.
4. What is the maximum value covered under FAST-DS?
The monetary limit depends on the category. Category 1 covers undisclosed foreign
assets or income where the aggregate value does not exceed ₹1 crore. Category 2
covers specified foreign assets where the aggregate value does not exceed ₹5
crore, subject to the prescribed conditions.
5. How much payment is required under FAST-DS?
For Category 1, the amount payable comprises 30% tax plus an additional amount
equal to that tax, effectively 60% of the relevant value.
For eligible Category 2 cases, the prescribed fee is ₹1 lakh.
6. What is Form 1 under FAST-DS?
Form 1 is the declaration submitted by the taxpayer to disclose the eligible foreign
asset or foreign income under the scheme. It is filed electronically through the
Income Tax e-filing portal.
7. What is ITNS 289?
ITNS 289 is the prescribed challan for making payments under FAST-DS after the
taxpayer receives the determination of the amount payable through Form 2.
8. Does FAST-DS provide immunity from prosecution?
A valid declaration and prescribed payment can provide specified immunity from
further tax, penalty and prosecution under the Black Money Act for matters covered
by the declaration, subject to the conditions and exclusions under the scheme.
9. Is FAST-DS applicable to foreign ESOPs and RSUs?
Foreign ESOPs and RSUs are specifically identified by the Government as examples
of foreign-asset non-disclosures that may be relevant to the scheme. However,
eligibility must be checked based on the specific facts and conditions.
10. Should a taxpayer file FAST-DS without professional advice?
Taxpayers should first determine their residential status, the source and value of the
asset, whether the income was previously offered to tax, and whether the asset falls
within an eligible category. For complex cases, professional review can help avoid an
incorrect declaration or payment.
11. What if my undisclosed foreign income or assets are more than ₹1 crore?
Category 1 of FAST-DS will not be available. The ₹1 crore limit applies to the
aggregate value of the undisclosed foreign asset (valued as on 31 March 2026) and
the undisclosed foreign income taken together. The scheme has no higher slab, so
there is no option to pay a higher rate and still use FAST-DS for such cases.
Such cases would fall under the regular provisions of the Black Money Act. These
generally involve tax at 30%, a penalty equal to three times that tax (effectively 90%
of the value), a separate penalty of ₹10 lakh for not reporting the foreign asset in the
return, and possible prosecution. Taxpayers in this situation should get professional
advice before taking any step.
12. What if my undisclosed foreign assets with known or already-taxed sources are more than ₹5 crore?
Category 2 will not be available. The ₹5 crore limit is a strict ceiling, and the official
FAQs confirm that a taxpayer whose aggregate value of such assets exceeds ₹5
crore (for example, ₹6.5 crore) cannot use this category. There is no higher fee
band.
Because the source of the asset is explained, the main risk in such cases usually
relates to not reporting the asset in the foreign-asset schedule of the return. Under
the Black Money Act, this can attract a penalty of ₹10 lakh for each year of non-
disclosure and, in certain cases, prosecution. Such taxpayers should review their
options with a tax professional, including correcting their disclosures where the law
permits.
13. Does a foreign asset with an explained source count towards the ₹1 crore limit?
Generally, no. The ₹1 crore limit applies only to undisclosed foreign income and
undisclosed foreign assets falling under Category 1. An asset whose source of
investment is explained, such as ESOP shares already taxed as a perquisite on
vesting, is generally not treated as an undisclosed asset for this purpose. However,
any foreign income from that asset that was not reported (such as dividends or
capital gains) may still need to be considered under Category 1.
14. Is the ₹1 lakh Category 2 fee payable for each asset or for each year?
The ₹1 lakh fee is a flat amount, and the ₹5 crore limit is tested on the aggregate
value of the assets declared. The scheme does not provide a per-year or per-asset
multiplier. Taxpayers should still confirm how their specific assets are treated under
the rules before filing.
15. How is the value checked against the ₹1 crore and ₹5 crore limits?
The value of a foreign asset is generally determined as on 31 March 2026 under the
prescribed valuation rules. For some assets, the prescribed value may be different
from the current market value or balance. For example, the official guidance values a
foreign bank account based on the deposits made into it rather than its closing
balance. Since a small difference in valuation can decide whether a case falls within
or outside the limits, the valuation should be supported with proper documents.
