Income Tax Foreign Assets Disclosure Scheme 2026: Who Can Declare Undisclosed Overseas Assets, Tax Rates and Deadlines

The Income Tax Department has released comprehensive guidelines for the upcoming Foreign Assets Disclosure Scheme 2026, set to commence on August 16. This scheme permits eligible taxpayers to disclose undisclosed foreign assets or income by paying the applicable tax or fee. It is open to residents, non-residents, and resident but not ordinarily resident (RNOR) taxpayers who were residents in India during the year of income or when the asset was acquired.

Eligible taxpayers can make declarations in three scenarios: failure to file a return, omission of foreign assets or income from a filed return, or when income or assets could otherwise escape assessment. The scheme divides disclosures into two categories. The first category includes foreign assets or income that were never disclosed to the tax authorities, with a maximum declared value of Rs 1 crore as of March 31, 2026. A tax rate of 30% and an additional 30% results in a 60% effective levy for this category.

The second category encompasses foreign assets already taxed but not reported, as well as assets acquired while the taxpayer was non-resident but omitted from disclosure later. This category has a higher threshold of Rs 5 crore and requires a flat fee of Rs 1 lakh. Taxpayers with assets exceeding Rs 5 crore are ineligible for the scheme. Declarations must be submitted electronically between August 16 and December 31 via Form 1.

The valuation for foreign assets follows the higher of acquisition cost or open-market value as of March 31, 2026. A recognized valuer's report can be utilized when available. Foreign bank accounts are valued based on deposits made since account opening, with specific exclusions to avoid double counting. Upon Form 1 verification, the tax authority releases Form 2 within a month, outlining the payable amount.

Taxpayers have two months to make the payment, with a possible two-month extension at 1% monthly simple interest. Failure to pay within the four-month limit forfeits the scheme's benefits.

A valid declaration with payment provides immunity from further tax, penalties, and prosecution under the Black Money Act, 2015. The declared amount will not be considered in the taxpayer's total income. However, the scheme does not offer relief for already completed assessments and excludes assets or income linked to crime proceeds under investigation or assessment years already concluded under the Black Money Act.