Union Budget 2026 Proposes One-Time Foreign Asset Disclosure Scheme: Know the New Amnesty Scheme and Benefits

While presenting the 2026 Union Budget, the Union Finance Minister Nirmala Sitharaman recognised that students, young professionals, technology employees, relocated NRIs, and similar taxpayers often face practical and unintentional lapses in reporting foreign income or assets due to complex disclosure rules. To tackle these issues, the Budget has proposed a six-month amnesty-style disclosure window, officially named Foreign Assets of Small Taxpayers - Disclosure Scheme, 2026 (FAST-DS 2026)

India’s foreign asset reporting rules mainly come from the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This act introduced strict penalties and legal actions for failing to disclose assets. In 2015, there was a one-time compliance window, but it targeted mainly high-value foreign holdings, which overlooked small or low-value foreign holdings. These include overseas bank accounts, ESOPs, income from short-term foreign jobs and foreign internships. The Scheme aims to address this issue.

Essentially, the Amnesty Model means that the scheme offers a time-bound opportunity to individuals (small taxpayers) to disclose their assets and settle their dues accordingly, with a penalty or interest. This is aimed at various objectives, which include the reduction of the high volume of pending litigation, financial relief to small taxpayers, improved compliance, and revenue generation.

The proposed scheme seeks to clear a significant backlog of customs duty disputes, which includes over 38,000 pending cases involving about Rs. 1.52 lakh crores in blocked revenue. The Scheme allows settlements through payment of the principal duty only and waives interest and penalties which encourages faster resolution of disputes.

The scheme extends to small taxpayers with foreign income or assets below a set limit. Importantly, it does not apply to large-scale or intentional tax evasion, nor cases like narcotics smuggling, gold-related offences, and wilful default. This keeps a clear line between genuine non-compliance and deliberate hiding of income.

Eligible taxpayers can gain significant relief through this scheme. It lowers the risk of penalties compared to regular enforcement rules and protects taxpayers from prosecution for honest disclosures. Taxpayers can address past non-compliance using a straightforward process. This avoids long legal battles and uncertainty. For people who frequently move across borders, it means clearer expectations, more confidence in compliance, and overall peace of mind.

In addition to the FAST-DS 2026, the Union Budget 2026 has introduced several taxpayer-friendly procedural changes. These include longer deadlines for filing revised returns with a small fee, keeping the July 31 deadline for submitting ITR-1 and ITR-2, and extending the deadline to August 31 for non-audit business cases and trusts. Furthermore, the Budget simplifies tax deduction at source for NRIs selling property. It shifts compliance responsibility to the resident buyer, reducing procedural burdens and improving tax administration efficiency.

The Foreign Assets of Small Taxpayers, Disclosure Scheme (FAST-DS 2026) shows a careful change in India’s tax enforcement. It focuses on encouraging small taxpayers with limited foreign exposure to comply voluntarily rather than facing penalties. The scheme provides a temporary disclosure period that offers reduced penalties and protection from legal action. This approach recognizes the real difficulties in reporting while keeping the integrity of the foreign asset disclosure system. Alongside other compliance-focused reforms in the Union Budget 2026, FAST-DS 2026 supports the government’s wider goal of making tax administration simpler and more transparent.

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