FAST-DS Scheme: New Window to Disclose Undisclosed Foreign Assets

The Income Tax department has come up with a one-time voluntary disclosure facility called the Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS) running from August 16 to December 31, 2026. The disclosure includes foreign bank accounts, properties, jewelry, stocks, securities, and other foreign assets up to certain monetary ceilings. Taxpayers with the unreported foreign income/assets have a chance of regularising to some of their omissions.

What Is FAST-DS Scheme?

The FAST-DS is a one-time voluntary disclosure procedure for taxpayers who wish to disclose certain foreign assets/income which have been unduly omitted previously.

There are two broad categories of this scheme,

• Undisclosed and never-taxed foreign income or assets: up to ₹1 crore.
• Foreign assets which have already been taxed, or foreign assets acquired during the time when the taxpayer was a non-resident but not declared in the ITR: up to ₹5 crore.

These amounts of ₹1 crore and ₹5 crore are ceiling amounts and not tax slabs. Just because an asset/income exceeds these limits, it cannot be included in these categories by simply paying taxes up to these amounts.

Which Foreign Assets Can be Revealed?

The scheme applies to certain kinds of foreign assets or income such as,

• Foreign bank accounts
• Immobilized properties
• Jewelleries
• Works of art
• Shares and securities
• Certain other foreign assets or income
• RSUs and ESOPs not disclosed earlier

This could especially be important for professionals who have received foreign equity compensation due to their work with multinationals.

What Taxes and Fees Are Imposed?

In the case of the first category, which includes previously undisclosed and untaxed foreign income/assets up to ₹1 crore, the taxpayer has to pay,

• 30% of FMV as tax, and
• 30% of FMV as additional income tax as penalty

A valid declaration and payment would ensure immunity from all other tax and penalties and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 based on the terms of the scheme.

In the case of the second category of foreign assets up to ₹5 crore which have been already taxed or purchased when the taxpayer is a non-resident, a flat fee of ₹1 lakh is required.

Whose Income or Assets Cannot be Declared Under FAST-DS Scheme?

FAST-DS scheme cannot be used where the income or asset, whether directly or indirectly, is the proceeds of crime for which action is going on or has been started under the Prevention of Money-laundering Act, 2002.

Further, FAST-DS scheme cannot be used where the income or asset is in respect of an assessment year for which assessment proceedings have been completed under the Black Money Act.

Valuation of Foreign Assets

Under FAST-DS, the valuation date is 31st March, 2026.

In general, fair market value means either the cost of acquisition or the price which such asset would fetch in the open market.

In case there is valuation report of a Government recognised valuer of the jurisdiction in which such asset exists then it can be used as proof of declaration.

Special valuation provisions exist for foreign shares, securities and interest in foreign partnerships, AOPs and LLPs.

FAST-DS Declaration

FAST-DS declaration must be filed electronically in Form 1 by the taxpayer to the income-tax authority.

After passing the payment order by the authority, generally, the payable amount must be paid within two months.

However, there could be a little additional time available. Delay in making payment shall attract 1% simple interest for each month or part thereof, subject to the maximum limit provided.

Importance of FAST-DS Scheme

FAST-DS is formulated at a time when the exchange of information about financial accounts between countries is increasing day by day.

The overseas financial accounts information is received by India through various methods like CRS and Foreign Account Tax Compliance Act (FATCA).

Information regarding foreign accounts can also come in the Annual Information Statement (AIS) of the taxpayer on income-tax e-filing portal.

This means that the FAST-DS scheme gives an opportunity to eligible taxpayers to fix some past problems in relation to reporting of such information.