Budget 2026-27 Introduces One-Time Disclosure Scheme For Small Taxpayers' Undisclosed Foreign Assets

The Union Budget 2026 has introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 through the Finance Bill, 2026.

The scheme proposes to offer a one-time opportunity for eligible taxpayers to come forward and declare undisclosed foreign assets or foreign income. On making a valid declaration and payment, taxpayers can obtain immunity from penalty and prosecution under the Black Money law.

The Scheme covers undisclosed assets located outside India as well as undisclosed foreign income that was not reported earlier, was not assessed, or had escaped assessment under the Income-tax Act.

It is open to resident taxpayers. It is also available to non-residents and not ordinarily residents who were residents at the time the foreign asset was acquired or the foreign income arose.

Under the Scheme, taxpayers with aggregate undisclosed foreign assets and income of up to ₹1 crore can regularise such disclosures by paying tax at 30 per cent along with a penalty equal to 100 per cent of the tax amount.

In specified cases, a different treatment applies. For foreign assets acquired during years when the declarant was a non-resident, or assets acquired from income that had already been taxed but not disclosed subsequently, a fixed payment of ₹1 lakh is prescribed, subject to an aggregate asset value cap of ₹5 crore.

Declarations must be filed electronically within the period to be notified by the government.

After verification, the tax authority will pass an order determining the amount payable under the Scheme. The amount must be paid within the prescribed time.

On payment, the declared income or asset will not be included in the total income under the Income-tax Act or the Black Money Act.

A valid declaration grants immunity from further tax, penalty, and prosecution under the Black Money Act only in respect of such declared income or assets up to March 31, 2026.

The Scheme does not apply to assets representing proceeds of crime. It is also unavailable where proceedings under the Black Money Act are pending or have been completed.

Amounts paid under the Scheme are non-refundable. Declarants are barred from seeking rectification, revision, set-off, or any appellate remedy in relation to the declaration.