'Pay 60% or Face ₹10 Lakh Penalty': How Central Government's FAST-DS Scheme Gives Last Chance for Overseas Assets Until 31 December

Taxpayers holding undisclosed foreign bank accounts, overseas shares, ESOPs, or property have until 31 December 2026 to regularise their global holdings under the central government's new FAST-DS (Foreign Assets of Small Taxpayers — Disclosure Scheme).

The voluntary compliance window, which came into effect on August 16, offers resident taxpayers, non-resident Indians (NRIs), and returning residents a final exit path to declare past foreign assets and avoid severe criminal prosecution under the stringent Black Money Act.

Central Board of Direct Taxes Targets Small Taxpayers in Special 6-Month Window

The Central Board of Direct Taxes (CBDT) notified the FAST-DS framework following provisions introduced in the Finance Act, specifically designed to help small investors, IT professionals with foreign stocks, and young professionals who inadvertently missed declaring overseas assets in their Income Tax Returns (ITRs).

Under standard tax enforcement, failing to disclose foreign assets under Schedule FA of the ITR attracts a flat penalty of Rs 10 lakh per asset per year alongside potential imprisonment of up to seven years. The new six-month window creates a legally protected mechanism to clear past lapses before enforcement agencies initiate fresh recovery measures.

Two Compliance Categories: How the Scheme Works

The disclosure mechanism separates non-compliant accounts into two clear categories based on the nature of the default:

• Category A (Completely Unreported Assets): Applies to individuals with undisclosed foreign assets or untaxed overseas income with an aggregate value up to Rs 1 crore as on 31 March 2026. Taxpayers pay a flat 30 per cent tax plus a 30 per cent penalty—totalling a 60 per cent outgo—to secure full immunity from prosecution.
• Category B (Technical Filing Lapses): Applies to taxpayers who disclosed foreign income and paid due taxes in India but failed to report the underlying foreign asset in Schedule FA. For foreign assets valued up to Rs 5 crore, taxpayers pay a flat fee of Rs 1 lakh to clear their records and extinguish the recurring Rs 10 lakh annual penalty.

Automatic Statutory Immunity Extinguishes Prosecution Risk

The scheme provides complete statutory immunity from both the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 and the Income-tax Act, 1961 once payments clear. Disclosed holdings will be treated as fully regularised for all future assessment years and cannot be reopened by tax authorities.

With automatic information-exchange agreements like the Common Reporting Standard (CRS) feeding real-time banking data directly to Indian authorities, officials warn that the 31 December deadline remains absolute, with no further extensions planned.