HNIs & Global Indians – Foreign Assets of Small Taxpayers Disclosure Scheme 2026
Budget 2026 introduces the “Foreign Assets of Small Taxpayers Disclosure Scheme, 2026” to allow small taxpayers to voluntarily declare certain undisclosed foreign income and assets with limited immunity under the Black Money Act. For HNIs, returning NRIs and globally mobile families in Delhi NCR, this scheme can be an important risk‑management tool.
Why a Foreign Assets Disclosure Scheme Now?
Despite earlier amnesty measures and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, many small taxpayers still have:
- Historic foreign bank accounts, small portfolios or properties opened while non‑resident
- Assets acquired from tax‑paid Indian funds but not properly reported after becoming resident
- Legacy structures inherited from family members abroad
The new scheme aims to:
- Provide a structured, time‑bound window for regularisation
- Restrict the window to small cases (defined monetary caps)
- Offer limited immunity to those who come forward voluntarily under prescribed conditions.
Who Can Use the 2026 Disclosure Scheme?
The Scheme applies to:
- A person who is resident in India in the previous year; or
- A person who is Non‑Resident or Not Ordinarily Resident in the previous year, but:
- Was a resident when the foreign income was earned, or
- Was a resident when the foreign asset was acquired.
In other words, even some NR/NORs can use the scheme if the origin of the foreign income/asset traces back to their resident years.
The scheme covers situations where:
- No Income‑tax Return was filed earlier, or
- Return was filed but foreign income/asset was not disclosed, or
- Such income/asset escaped assessment under the Income‑tax Act.
Tax/Fee Payable Under the Scheme
The payable amount depends on the nature and quantum of foreign income/assets.
Category 1 – Undisclosed Foreign Asset/Income (Up to ₹1 Crore)
- Applicable where the total value of undisclosed foreign assets and income does not exceed ₹1 crore.
- Amount payable:
- 30% tax on the value of undisclosed foreign assets (as on 31 March 2026), and
- 30% tax on undisclosed foreign income, and
- Penalty equal to 100% of the total tax determined above.
Effectively, up to 60% of the undeclared amount may be payable.
Category 2 – Certain NR to Resident Situations (Up to ₹5 Crore)
- Applicable where:
- Foreign asset was acquired while the person was Non‑Resident, but was not disclosed after becoming Resident, or
- Foreign asset was purchased from income already taxed in India but not reported.
- Total value of foreign assets under this category must not exceed ₹5 crore.
- Amount payable: Flat fee of ₹1,00,000 (no percentage tax).
This is clearly a favourable option for those who satisfy the conditions and have relatively modest overseas holdings.
Summary Table
| Sl. No. | Type of Foreign Asset / Income | Amount Payable | Conditions / Limits |
|---|---|---|---|
| 1 | Undisclosed foreign asset or undisclosed foreign income | 30% on asset value + 30% on foreign income + 100% penalty (total ≈ 60%) | Total undisclosed value ≤ ₹1 crore |
| 2 | Foreign asset acquired while NR but not disclosed after becoming Resident, or purchased from income already taxed in India but not reported | Flat fee of ₹1,00,000 (no % tax) | Total value of such foreign assets ≤ ₹5 crore |
Procedure and Timelines – From Declaration to Immunity
The Scheme lays down a defined electronic process.
- Electronic Verification (Section 118)
- After declaration filing, the payable amount is electronically computed and communicated within one month through an order in the prescribed form.
- Payment Timeline (Section 119)
- Declarant must pay the amount within two months of receiving the order.
- If not paid within this period, payment can still be made in an additional two months with 1% simple interest per month.
- Intimation and Certification
- Declarant must intimate payment details within the stipulated period.
- On correct intimation, a payment certification order is issued electronically within one month.
- This order is final and conclusive for the Scheme.
- Immunity (Section 123)
- A valid declarant who pays the required amount is granted immunity from further tax, penalty or prosecution under the Black Money Act in respect of the declared income/assets.
When the Scheme Does Not Apply
Section 124 of the Scheme explicitly excludes certain cases.
The scheme will not apply to:
- Any income or asset that is, directly or indirectly, proceeds of crime for which proceedings have been initiated or are pending under the Prevention of Money‑laundering Act, 2002.
- Any income or asset related to an assessment year for which assessment proceedings have already been completed under the Black Money Act, 2015.
This is not a blanket amnesty; it is targeted towards compliant regularisation of smaller cases.
Practical Considerations for HNIs and Returning NRIs in Delhi NCR
1. Inventory and Classify Overseas Assets
HNIs and families should:
- Prepare a complete inventory of foreign bank balances, securities, funds, ESOPs, properties and insurance policies.
- Classify each item as:
- Acquired when Resident vs Non‑Resident,
- Sourced from taxed‑in‑India income vs foreign‑sourced income,
- Properly disclosed vs undisclosed in Indian filings.
2. Cost‑Benefit Analysis
For eligible cases:
- Compute approximate liability under Category 1 (up to 60% effective) and Category 2 (flat ₹1 lakh, if conditions met).
- Compare this with potential tax, interest, penalty and prosecution exposure under the Black Money Act if the asset is detected later.
3. Align with Global Reporting (CRS/FATCA)
With strengthened global information exchange, undisclosed foreign assets are increasingly traceable.
Regularising via this scheme may mitigate future investigative and reputational risks.
FAQs – Foreign Assets Disclosure Scheme 2026
1. Is this an amnesty scheme?
It is a limited regularisation window with specified tax/fee and conditional immunity under the Black Money Act. It is narrower than earlier one‑time schemes, both in scope and in monetary limits.
2. Can I use this scheme for assets above ₹5 crore?
No. Monetary caps are explicit:
- Category 1: total undisclosed foreign assets and income ≤ ₹1 crore.
- Category 2: total eligible foreign assets ≤ ₹5 crore.
Assets beyond these caps fall outside the scheme.
3. What if I already have ongoing Black Money Act proceedings?
The scheme does not apply to income/assets for assessment years where assessments under the Black Money Act are already completed, or where assets are proceeds of crime under PMLA with ongoing proceedings.
4. Will disclosure under this scheme automatically regularise FEMA issues?
No. This is an Income‑tax/Black Money Act‑oriented scheme. Separate compliance or compounding may be required under FEMA, depending on the asset/transaction. Coordination with legal and FEMA counsel is essential.
Call‑to‑Action
If you are an HNI, returning NRI or globally mobile professional in Delhi NCR with legacy overseas holdings, the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 may be a one‑time chance to reset your compliance position.
Our Chartered Accountant team can:
- Confidentially review your foreign asset and income profile
- Assess eligibility under the scheme and quantify potential outflows
- Coordinate with legal advisers on Black Money Act and FEMA implications
To explore whether this scheme is suitable for your situation, please connect with us for a secure, no‑obligation discussion.
Disclaimer
This blog is a general informational update based on the Finance Bill, 2026 and publicly available sources and does not constitute legal or tax advice. The scheme’s applicability depends on individual facts, further rules and enforcement approach. Readers should seek independent professional advice from their Chartered Accountant, legal counsel and other advisers before making any disclosure decision.
