Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS)

 

Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS)

The Income Tax Department has opened a one-time voluntary disclosure window under the Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS) to help small taxpayers (such as tech employees with RSUs/ESOPs, returning NRIs, students, and young professionals) regularize previously unreported foreign income and assets.

Key Window & Scope

• Operative Window: August 16 to December 31.

• Valuation Cut-Off Date: March 31, 2026.

• Immunity Granted: Protection from prosecution, additional tax, and penalty under the Black Money Act, 2015 for validly declared assets/income.

Disclosure Categories & Cost Breakdown

The scheme divides declarations into two distinct categories. These limits are hard caps, not tax slabs (e.g., an undisclosed asset of ₹1.5 crore cannot use Category 1):

Parameter	Category 1: Undisclosed / Untaxed Income & Assets	Category 2: Taxed / Pre-Acquired (NR) Undeclared Assets
Eligibility Scope	Foreign income/assets that were never taxed before.	Foreign assets from taxed funds or acquired when the assessee was a non-resident, but omitted from ITR schedules (e.g., Schedule FA).
Monetary Limit	Aggregate value up to ₹1 crore.	Aggregate value up to ₹5 crore.
Payable Amount	60% total effective levy: • 30% Tax on Fair Market Value (FMV) / income • 30% Additional tax in lieu of penalty	Flat fee of ₹1 lakh (replaces the standard ₹10 lakh non-disclosure penalty).

Covered Assets & Exclusions

Eligible Assets:

• Foreign bank accounts.

• Foreign ESOPs and Restricted Stock Units (RSUs).

• Listed and unlisted foreign shares / securities.

• Immovable overseas property.

• Jewellery, artistic work, or interest in overseas LLPs/partnerships.

Strict Exclusions:

• Assets/income linked directly or indirectly to proceeds of crime under the Prevention of Money-laundering Act (PMLA), 2002.

• Assessment years where proceedings have already been completed under the Black Money Act, 2015.

Valuation Framework (as of March 31, 2026)

• General Assets: Higher of the cost of acquisition or open market selling price (ideally supported by a recognized valuer's report). If no market report exists, indexed cost of acquisition is used.

• Quoted Securities: Higher of acquisition cost or the average of the highest and lowest quoted market price.

• Unquoted Shares: Higher of acquisition cost or formula-based valuation (derived from net book value, liabilities, and FMV of underlying assets).

• Valuation Variance Buffer: A variance of up to 20% between declared FMV and tax authority assessment will not invalidate the declaration (except for bank accounts).

Procedure & Payment Timelines

1. Filing: File Form 1 electronically on the Income Tax e-filing portal.

2. Order Issuance: Tax authorities process the declaration and issue an order (Form 2) specifying the amount payable.

3. Standard Payment Window: Payment must be made within 2 months of the order date.

4. Grace Period: An additional window of up to 2 months is permitted with 1% simple interest per month (or part of a month) of delay.

5. Absolute Cut-off: The maximum allowable period is 4 months from the end of the month in which Form 2 was passed; failure to pay within this window revokes all benefits under the scheme.