In an effort to resolve long-pending cases of unintentional overseas asset non-disclosure and promote voluntary compliance, the Union Budget 2026 has proposed a fresh amnesty window for small taxpayers. The move is accompanied by a relaxation of prosecution norms under the Black Money law.
Under the proposed Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS 2026), resident taxpayers will be given a limited-time opportunity to declare undisclosed foreign income and assets. This comes nearly a decade after the one-time compliance window introduced in 2015.
According to the explanatory memorandum, non-compliance continues to persist, particularly in legacy cases involving employee stock options from overseas employment, dormant foreign bank accounts of former students, insurance or savings of returning non-residents, and assets acquired during foreign deputations.
Graded Compliance Framework
The scheme introduces a two-tier structure for disclosures.
In the first category, taxpayers who failed to disclose foreign income or assets earlier and whose undisclosed amount does not exceed ₹1 crore will be required to pay 30 percent tax on the fair market value or undisclosed income. An additional 30 percent levy, in lieu of penalty, will also apply. In return, they will receive immunity from prosecution.
The second category applies to cases where taxpayers had disclosed income or paid tax but did not declare the associated foreign asset. Such individuals can obtain immunity from both penalty and prosecution by paying a flat fee of ₹1 lakh, provided the asset value does not exceed ₹5 crore.
Expert Criticism
Commenting on the proposal, Sandeep Bhalla, partner at Dhruva Advisors, said the amnesty appeared “half-hearted.”
“There is no justification for a ₹5 crore limit where tax has already been paid or where the asset was earned during non-residency,” he said. “In both cases, such income or assets are not taxable in India. Similarly, even where 30 percent tax and penalty are being collected, there is no reason to cap disclosures at ₹1 crore. There is a need for foreign exchange to enter the formal system.”
Relaxation Under Black Money Law
Separately, the government has proposed easing prosecution provisions under the Black Money Act for minor non-disclosures. Under the new rules, residents will not face criminal proceedings for foreign assets—other than immovable property—if their aggregate value does not exceed ₹20 lakh.
This relaxation will apply retrospectively from October 1, 2024.
Encouraging Voluntary Disclosure
The proposed amnesty and relaxed prosecution norms reflect the government’s attempt to balance enforcement with compliance. By offering limited immunity and reduced penalties, the scheme aims to bring legacy foreign assets into the tax net while reducing litigation and encouraging taxpayers to regularise past omissions.
