The Modi government has launched a one-time disclosure scheme allowing eligible taxpayers to declare their undisclosed foreign assets, undisclosed foreign income, or undeclared foreign assets, on payment of a specified tax or fee.
This one-time disclosure scheme is contained in Chapter IV of the Finance Act, 2026 and was notified under the Foreign Assets of Small Taxpayers-Disclosure Scheme Rules, 2026, by the Central Board of Direct Taxes (CBDT). It will remain effective from August 16, 2026, till December 31, 2026.
Finance Minister Nirmala Sitharaman had announced this initiative in the Union Budget on February 1, 2026. It provides a valuable opportunity to taxpayers to declare their foreign assets or income that they failed to disclose in the past. Taxpayers such as students, young professionals, technology employees and relocated non-resident Indians who may have failed to disclose eligible foreign assets or income can benefit from the scheme.
Under the one-time disclosure scheme, taxpayers will be allowed to declare their undisclosed foreign bank accounts, immovable property, jewellery, artistic work, shares, securities or any other asset or income on payment of a specified tax or fee.
To make taxpayers aware of the scheme and ensure that they understand its features well, the Income Tax Department has issued a comprehensive FAQ document on the scheme and rules. Clear and concise explanations regarding the scheme are contained in the FAQs to provide clarity to taxpayers.
The declarations under the scheme have been divided into two categories. The first category has undisclosed foreign income or assets located outside India not exceeding ₹1 crore in value, which were not previously offered to tax.
The second category covers foreign assets located outside India not exceeding ₹5 crore in value, which were already offered to tax or acquired when the taxpayer was a non-resident but were not reported in the relevant tax-return schedule.
To encourage taxpayers to make declarations under the scheme, a provision has been made to protect them from further tax and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in respect of the assets or income disclosed.
In addition, the declared income or the amount invested in the disclosed asset will also not be included in the taxpayer’s total income under the Income-tax Act, 1961 or the Black Money Act.
The scheme is entirely electronic, requiring taxpayers to file a declaration in Form 1. After this, the Income-tax Department will verify the disclosure through the Principal Director General or Director General of Income-tax (Systems).
Following the verification, it will issue an order in Form 2 specifying the amount payable, within one month of the end of the month in which the declaration was made.
The payment is to be made within two months of receiving the order, failing which a two-month extension can be granted. However, simple interest at a 1% per month interest rate will be charged on the outstanding amount. The declaration will lapse or be treated as void if the payment is not made even within the extended period.
