Do you have undisclosed assets abroad? You might get a chance until December 31; CBDT has issued new rules..
The government has introduced a new facility for small taxpayers who failed to declare foreign assets or income in their income tax returns. The Central Board of Direct Taxes (CBDT) has notified the rules for the 'Foreign Assets Disclosure Scheme for Small Taxpayers, 2026'. These new rules will come into effect on August 16, 2026.
The objective of this scheme is to provide an opportunity for small taxpayers to disclose foreign assets and income that they were previously unable to report in their tax returns for any reason. However, availing this facility requires meeting specific asset limits and other conditions.
**In which cases is the benefit available?**
The scheme covers four types of cases related to foreign assets and income. This includes previously undeclared foreign assets and foreign income that was not reported to the tax department. Assets purchased abroad while the individual was not a resident of India—but which were not disclosed after becoming a resident—also fall within the scheme's scope. Additionally, if an individual purchased a foreign asset using income on which tax had already been paid but forgot to report it in their income tax return, they too can make a declaration under this scheme.
**Limits of ₹1 crore and ₹5 crore**
Two distinct limits have been set under the scheme. The combined fair market value of undeclared foreign income and undeclared foreign assets must not exceed ₹1 crore. Meanwhile, a limit of ₹5 crore applies to assets purchased while the individual was a non-resident, or assets purchased using tax-paid income that were omitted from the tax return. Taxpayers cannot avail of this scheme if the asset value exceeds these limits.
**Payment of up to 60% in the ₹1 crore category**
In the ₹1 crore category, taxpayers are required to pay a 30% tax on the value of the undeclared asset or income. Furthermore, a penalty equal to the tax amount—effectively 100% of the tax—must also be paid. Thus, the total payment could amount to approximately 60% of the asset or income value. A different arrangement applies to the second category. For eligible assets worth up to ₹5 crore, there is a provision for a fixed fee only. The fee may be nil for smaller declarations, whereas a flat fee of ₹1 lakh applies in certain cases. There are no separate taxes or penalties in this category.
**Relief upon declaration**
If a taxpayer makes the required payment within the stipulated timeframe and their declaration is deemed valid, they may be granted relief from further taxes, penalties, and prosecution. This relief will be provided under the Black Money Act, 2015. In essence, this scheme offers an important opportunity for eligible individuals to regularize past matters.
**Deadline: December 31, 2026**
Taxpayers must submit their declarations online using Form 1. The deadline for this is December 31, 2026. Subsequently, income tax authorities will determine the payable amount via Form 2. Once the amount is determined, taxpayers will have two months to make the payment without incurring interest. An additional two-month period may also be available, but interest at the rate of 1% per month will be charged on the outstanding amount during this time. Beyond this, the scheme's benefits will lapse, and the declaration will be considered invalid.
**How will the asset value be determined?**
The fair market value of foreign assets will be determined based on the value as of March 31, 2026. Distinct rules apply to different types of assets, such as gold, jewelry, art objects, shares, immovable property, and bank accounts. Amounts held in foreign currency will be converted into Indian Rupees using the RBI reference rate applicable on March 31, 2026. Notably, the declaration will not be cancelled solely due to a subsequent discrepancy in the asset's value; if the valuation difference is up to 20%, the declaration will not be deemed invalid on that ground alone.
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