Income Tax Disclosure Scheme Opens August 16, Small Taxpayers Can Declare Undisclosed Foreign Assets Until December 31

The Income Tax Department has launched a new disclosure scheme, effective August 16, 2026, allowing eligible taxpayers to disclose undisclosed foreign assets and income until December 31, 2026. The scheme is open to residents, non-residents, and residents but not ordinarily resident (RNOR), provided they were residents in the year of undisclosed income or asset acquisition.

Eligible taxpayers can file the disclosure electronically using Form 1, with two categories of disclosures. The first category includes undisclosed foreign assets or income with no tax paid, capped at Rs 1 crore as of March 31, 2026. Taxpayers would pay 30% tax plus the equivalent amount, totaling 60% of the undisclosed amount. For instance, Rs 60 lakh in an undeclared foreign bank account and Rs 20 lakh in undisclosed income would result in a total payment of Rs 48 lakh.

The second category comprises foreign assets with already paid tax or those acquired by non-residents but unreported in income tax returns, with a cap of Rs 5 crore. Taxpayers will pay a fixed fee of Rs 1 lakh for these assets. Assets totaling more than Rs 5 crore are ineligible for the scheme under this category.

After reviewing Form 1, the tax authority will issue an order in Form 2 within a month, outlining the payable amount. Taxpayers have two months to make the payment, with an extension of two months possible through paying 1% monthly interest. Non-payment within the four-month window forfeits the scheme's benefits for that declaration.