Mint Explainer | What India’s new foreign asset disclosure rules mean for taxpayers

New rules offer a ₹1 lakh route for some taxpayers, while those with undisclosed foreign assets or income could face a payment of 60% of the value

For Indians with unreported foreign assets, the government has opened a narrow window to come clean—but the price of disclosure could vary sharply.

A taxpayer who has an overseas property bought with income earned while non-resident, or a foreign asset acquired from income already taxed in India, could pay as little as ₹1 lakh. Those with undisclosed foreign assets or income could face a payment of 60% of the value.

The government has notified the Foreign Assets of Small Taxpayers—Disclosure Scheme Rules, 2026, which came into force on 16 August. Taxpayers have until 31 December 2026 to declare eligible assets or income, with 31 March 2026 as the valuation date.

The scheme, however, is not a blanket amnesty. Who qualifies, how the asset was acquired and whether the underlying income was already taxed will determine the cost of disclosure. Taxpayers must establish the asset’s value, determine their eligibility and complete the electronic declaration process within the window.

Mint explains what the scheme means for taxpayers and who could benefit.

Why has the government introduced this window?

The rules create a route for specified taxpayers to disclose foreign assets or income that were not reported earlier. But they distinguish between undisclosed income and certain foreign assets that were not reported even though the income used to acquire them had already been taxed or was earned when the taxpayer was a non-resident.

The distinction matters because the financial consequences are very different. The declaration form requires details of the asset or income, the relevant year, residential status and supporting documents.

“The scheme is a welcome acknowledgement that not every foreign asset reporting lapse is a case of deliberate tax evasion. Many taxpayers, particularly those with overseas bank accounts, ESOPs, RSUs or past NRI connections, have struggled with the complexity of disclosure requirements. By providing a time-bound opportunity (until 31 Dec 2026) to regularise genuine omissions with certainty on tax costs and protection from prosecution, the government has taken a practical and taxpayer-friendly approach,” said Sonu Iyer, Partner and National Leader, People Advisory Services-Tax, EY India.

Who could benefit from the ₹1 lakh route?

The ₹1 lakh route applies to specified foreign assets with an aggregate value of up to ₹5 crore. One category covers an asset acquired from income earned outside India while the taxpayer was a non-resident, where the asset was not disclosed after the taxpayer became a resident.

The government’s illustration considers a person who acquired a foreign plot in 2015 from income earned abroad while being a non-resident. The property is worth ₹3 crore on the valuation date. Since it is within the ₹5 crore threshold, the amount payable is ₹1 lakh.

Another category covers a foreign asset acquired from income already offered to tax in India, but the asset was not subsequently disclosed. The rules illustrate this with foreign mutual fund units worth ₹2.5 crore.

Who qualifies for the ₹1 lakh route—and who faces a 60% payment?

The ₹1 lakh provision is not a general amnesty for any foreign asset worth up to ₹5 crore. Qualifying assets are aggregated.

For example, foreign mutual funds worth ₹2.5 crore and quoted foreign securities worth ₹4 crore total ₹6.5 crore. Since this exceeds the ₹5 crore threshold, the taxpayer is not eligible under the ₹1 lakh route.

The other category covers undisclosed foreign assets and/or foreign income, for which the aggregate value cannot exceed ₹1 crore. The amount payable is 60% of the combined value.

In its notification dated 15 August, the government illustrates the difference. A foreign bank account worth ₹60 lakh plus ₹20 lakh of undisclosed foreign income gives a combined value of ₹80 lakh. Tax at 30% is ₹24 lakh and the penalty is another ₹24 lakh, taking the total payable to ₹48 lakh.

Why does the source of the money matter?

The source of the money matters because the scheme treats undisclosed income differently from foreign assets acquired from income that was already taxed or earned while the taxpayer was a non-resident.

For example, Person A bought a foreign property from income earned while being a non-resident but did not report it after becoming a resident. Person B has an undisclosed foreign bank account and foreign income that was never reported. Depending on these circumstances, the two could face different treatment under the scheme.

The declaration form therefore requires details of the relevant year and the taxpayer’s residential status when the asset was acquired or the income was earned.

How will this help taxpayers?

For eligible taxpayers, the scheme provides a formal route to disclose specified past foreign-asset reporting failures.

Form 4 certifies the validity of the declaration and payment. The rules also provide protection against some valuation differences. For an asset other than a bank account, a difference of up to 20% from the declared fair market value will not, by itself, invalidate the declaration.

What does this mean for businesses and investors?

The scheme covers bank accounts, immovable property, jewellery, artistic works, shares and securities, and other assets. It could therefore be relevant to taxpayers with overseas investments or other foreign holdings that were not reported in the prescribed schedule.

Valuation will be important because the scheme uses 31 March 2026 as the valuation date and prescribes methods for determining fair market value.

What does the government gain?

The scheme gives the tax administration a standardized mechanism to bring specified foreign assets and income into the disclosure framework.

In the first category, the prescribed amount is 60% of the combined value; in the second, the payment is a ₹1 lakh fee. The process is electronic. Form 1 is the declaration, Form 2 determines the amount payable, Form 3 records payment and Form 4 certifies the declaration and payment.

About the Author

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.