In a move that brings immense relief to India’s global workforce, Finance Minister Nirmala Sitharaman has announced a historic “cleanup” opportunity in the Union Budget 2026-27. Formally titled the Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS), 2026, this initiative is designed to help citizens regularize forgotten or undisclosed foreign assets without facing the harsh legal consequences of the past.
Whether you are a software engineer who worked in Silicon Valley, a student who recently returned from London, or an NRI who has relocated back to India, this 6-month window is being hailed as your “final call” to get your tax records in order.
Why was this scheme introduced?
For years, the Indian tax system has been governed by the strict Black Money Act, which treats even a minor, non-disclosed foreign bank account as a serious criminal offense. For many young professionals, this created a “fear trap.” A student who opened a bank account during a US internship and forgot to close it (or disclose it) could technically face jail time or massive penalties, even if the account only had a few hundred dollars.
Acknowledging these practical issues, the government has decided to offer a compassionate, one-time exit strategy before the new, highly digitized Income Tax Act, 2025 takes full effect on April 1, 2026.
Understanding the Two Disclosure Categories
The scheme is divided into two simple buckets, depending on your situation:
Category A: The ‘Fresh Start’ for Undisclosed Assets
This category is for taxpayers who have foreign income or assets that were never reported to the Indian tax authorities.
• Eligibility: Applies to undisclosed income or assets valued up to ₹1 Crore.
• The Cost: You must pay 30% Tax on the fair market value of the asset plus an additional 30% income tax (which acts as a replacement for penalties).
• The Benefit: Once you pay this total of 60%, you receive complete immunity from prosecution. This means the government cannot take you to court or put you in jail for this past mistake.
Category B: The ‘Correction’ for Paperwork Errors
This category is for “honest but forgetful” taxpayers who actually declared their income and paid taxes on it but failed to mention the specific asset (like a house or a bank account) in their tax filings.
• Eligibility: Applies to assets valued up to ₹5 Crore.
• The Cost: You only need to pay a flat fee of ₹1 Lakh.
• The Benefit: You get full immunity from both penalties and prosecution. It is a simple “administrative fix” to ensure your records are clean moving forward.
Why the ‘180-Day’ Clock
The government has been very clear: this is a one-time, 6-month window. The urgency comes from two major changes:
1. The Black Money Act Shield: Currently, there is no penalty for non-disclosure of non-immovable foreign assets (like bank accounts) if the aggregate value is less than ₹20 Lakh. However, this new scheme provides an even broader shield of immunity with retrospective effect from October 1, 2024, for those who come forward now.
2. The New Tax Era: On April 1, 2026, the old 1961 Income Tax Act will be replaced by the Income Tax Act, 2025. The new Act is built on transparency and automated tracking. Once this new system starts, finding “hidden” assets will become much easier for the authorities, and the chance for a “soft landing” will disappear.
The Real-World Impact:
Imagine a tech professional, Priya, who worked in Germany for two years. She paid all her German taxes and returned to India in 2023. She has a German savings account with ₹15 Lakh she forgot to mention in her Indian tax returns.
• Before Budget 2026: Priya lived in constant fear that a tax audit would find this account, leading to a “Black Money” notice and a court case.
• Under FAST-DS: Priya can now pay a ₹1 Lakh fee (since she already paid tax on that income) and officially declare the account. She can then sleep peacefully, knowing she is 100% compliant with Indian law.
Conclusion: What Should You Do?
This Budget is not just about numbers; it is about trust. The government is inviting global Indians to “clean the slate” and become part of a transparent, modern economy.
Kaashika is a social media strategist and financial content creator at Lakshmishree. She specialises in simplifying complex IPO and stock market concepts into clear, easy-to-understand content. Having created over 500+ pieces of financial content across reels, blogs, website posts and digital creatives, Kaashika helps audiences connect with the world of finance in a more accessible and engaging way.
