GUWAHATI: The Central Board of Direct Taxes (CBDT) has opened a one-time disclosure window for eligible taxpayers to declare certain undisclosed foreign assets, undisclosed foreign income or undeclared foreign assets and secure immunity from further tax or penalty and prosecution under the Black Money Act, 2015, subject to the conditions of the scheme. The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, came into force on August 16 and declarations can be filed until December 31, 2026.
Under Section 133, taxpayers declaring an undisclosed asset located outside India or undisclosed foreign income under the first category have to pay 30% tax on the value of the asset or income, along with an additional amount equal to the tax. This takes the total amount payable to 60% of the declared value. The aggregate value of the undisclosed foreign asset as on March 31, 2026, and the undisclosed foreign income must not exceed ₹1 crore.
For example, an undisclosed foreign bank account valued at ₹60 lakh would attract ₹18 lakh in tax and an additional ₹18 lakh, taking the total amount payable to ₹36 lakh. Similarly, undisclosed foreign income of ₹20 lakh would attract ₹6 lakh in tax and another ₹6 lakh as the additional amount, taking the total payment to ₹12 lakh. If both are declared, the combined value would be ₹80 lakh. The tax would be ₹24 lakh and the additional amount another ₹24 lakh, taking the total payment to ₹48 lakh.
The scheme also covers certain foreign assets acquired from income on which tax has already been paid, including assets acquired during a period when the taxpayer was a non-resident or resident but not ordinarily resident and which were not disclosed in the prescribed return schedules. In this category, the value of the foreign asset must not exceed ₹5 crore, with a prescribed flat payment of ₹1 lakh.
Declarations have to be filed electronically through Form 1, along with supporting documents and valuation reports, wherever applicable. March 31, 2026, is the valuation date for assets covered by the scheme. Following verification, the income-tax authority will communicate the amount payable through Form 2. Taxpayers generally have two months to make the payment, while a further period of up to two months is available subject to simple interest at 1% for every month or part of a month of delay.
The scheme is intended to provide eligible taxpayers with a one-time opportunity to voluntarily disclose specified foreign assets and income that were not reported in their tax returns. The benefits of the scheme are subject to the eligibility conditions, prescribed disclosures and payment of the amount determined by the tax authorities.