Undisclosed foreign assets? Dec 31 deadline matters

The Income-tax Return (ITR) Forms 2 and 3 contain Schedule FA, a schedule introduced to tackle tax evasion and money laundering. This schedule has been in effect since FY 2011-12 (AY 2012-13). Individuals residing in India must disclose their foreign assets and income in Schedule FA, even if the income isn't taxable in the country. Non-disclosure can result in a penalty of Rs 10 lakh, and the individual could face jail time ranging from six months to seven years, along with fines.

The Budget 2026 introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 ('FAST Scheme') to provide amnesty to small taxpayers. This scheme, effective from 16th August 2026, offers a one-time, voluntary disclosure window between 16th August and 31st December 2026. A taxpayer can file a declaration during this period without facing any penalty or prosecution for non-disclosure in Schedule FA in earlier years.

Who can declare and who cannot? An assessee is eligible to file a declaration if they were resident in India in the relevant previous year. The declaration applies if the assessee has failed to file a return under Section 139 of the repealed Income-tax Act, 1961 or filed a return before the scheme's commencement without disclosing the asset or income.

However, the scheme is not available for income or assets representing proceeds of crime, for assets relating to Black Money Act proceedings, or if the undisclosed asset's value exceeds Rs. 1 crore or the undisclosed foreign income exceeds Rs. 5 crore.