A S BANKA ADVISORS

If anyone on your cap table or payroll holds stock in a foreign parent, ran a bank account abroad before moving home, or bought overseas shares through an LRS remittance, they may have a Schedule FA problem they have never named. As of 16 August 2026, that problem has a price, a form, and a hard deadline. This is an advisory read on what the new scheme actually asks of you, and where the real work lies.

What opened on 16 August 2026

The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS) is a one-time voluntary disclosure window. It sits in Chapter IV, sections 130 to 144 of the Finance Act, 2026. The machinery that makes it usable, the Rules and Forms 1 to 4, arrived with CBDT Notification 114/2026 (G.S.R. 732(E), dated 14 August 2026) under section 143 of that Act. The window runs from 16 August 2026 to 31 December 2026, and no declaration can be filed after that date.

Two design choices matter for how you use it. First, the valuation date is fixed at 31 March 2026 for every asset, whenever it was acquired. Second, the scheme is administered by the Director General of Income-tax (Systems), not by your jurisdictional Assessing Officer. A declaration does not land on the desk of the officer who may already be looking at your file. Given that AEOI and CRS data now flows into the AIS, the department already knows about a great deal of this; FAST-DS is the amnesty side of that same coin.

Two baskets, and roughly Rs 47 lakh between them

Section 133 of the Finance Act, 2026 sets a Table with two serial numbers, and the whole economics of the scheme sits in the gap. Serial number 1 (undisclosed) covers a foreign asset or foreign income that was never offered to tax. The ceiling is Rs 1 crore in aggregate, and the cost is 30 percent tax plus a penalty equal to that tax, an effective 60 percent. Serial number 2 (undeclared) covers an asset that was already offered to tax, or was acquired while you were a non-resident, but was never reported in the relevant Schedule of the return. The ceiling is Rs 5 crore, and the cost is a flat fee of Rs 1 lakh.

The classification is the whole game. The question is not what the asset is worth. It is whether the money that bought it had already borne tax in India, or was earned while the holder was a non-resident. That single question is the difference between 60 percent and Rs 1 lakh, and establishing it with evidence is where a professional earns a fee.

Who is really in the cheap basket

Serial number 2 does the real work, and the population is far larger than the phrase “undisclosed foreign assets” suggests. None of these cases involve unaccounted money:

• The foreign-parent employee. RSUs or options in a foreign parent, perquisite tax paid on vesting and capital gains tax paid on sale, but Schedule FA never filled.
• The returning NRI. A bank account opened while working in Dubai, London or Singapore as a non-resident, then never reported after moving back to India.
• The LRS investor. Foreign mutual funds or listed shares bought through an LRS remittance out of taxed Indian income, where the remittance was reported but the resulting asset was not.

Under the Black Money Act, 2015, each of these carries a flat penalty of Rs 10 lakh per year of default plus a prosecution exposure. FAST-DS prices the same exposure at Rs 1 lakh once, for an aggregate value up to Rs 5 crore. For a founder-led company, the practical point is that this reaches your senior hires, not just your promoters.

The trap in a foreign bank account

Before advising anyone to file, run one calculation. A foreign bank account is not valued at its closing balance. Under Rule 3, its value is the sum of all deposits made into it from the day it opened to 31 March 2026, net only of money cycled back in from the same account, or of amounts covered by an earlier declaration under Chapter VI of the Black Money Act. A modest salary account operated abroad for fifteen years can carry an aggregate deposit figure many times its balance. In a serial-1 case at 60 percent, the tax can exceed the money actually sitting in the account. Compute this first, because it frequently changes the answer on eligibility.

The 20 percent safe harbour, and the payment clock

Rule 5(2) is one of the quietly important provisions. For an asset other than a bank account, a variance of up to 20 percent between the fair market value you declare in Form 1 and the value an Assessing Officer later determines will not, by itself, void the declaration for misrepresentation or false particulars. That gives valuation judgements on property and unquoted shares a defined tolerance band. It does not extend to bank accounts, where the value is arithmetic.

Work backwards from the payment clock, not the filing date. Form 1 produces a Form 2 order within one month; payment is due within two months from the end of the month you receive it; a further two months is available at 1 percent simple interest per month, with a hard outer limit of four months from the end of the month of the Form 2 order. Filing in September rather than December buys three clear months of funding runway, and for a serial-1 case at 60 percent, funding is usually the binding constraint.

The immunity, and the hard edges

A valid declaration, paid and certified, gives immunity from further tax, penalty and prosecution under the Black Money Act, 2015 on the declared item, and keeps that income or investment out of total income under both the 1961 Act and the Black Money Act. In return, you give up any rectification, revision, set-off or appeal relief on the declared item. A declaration is a closing entry, not a bargaining position. The scheme does not apply where an asset represents proceeds of crime with pending PMLA proceedings, or where a Black Money Act assessment for the year is already completed. Note that pending Black Money Act proceedings do not disqualify you; only completed assessments do.

The ceilings are absolute. Rs 1 crore and Rs 5 crore are aggregate figures across all assets and years in the relevant basket. The gazette’s own worked example puts a Rs 6.5 crore holding outside the scheme entirely. There is no partial declaration and no proportionate relief for someone at Rs 5.1 crore, which is exactly why the classification and valuation work has to be done before anyone is told they qualify.

What to do before 31 December 2026

• Run a Schedule FA gap analysis for every person with a foreign connection: reconcile AIS foreign-asset data, LRS remittance history and foreign stock-award perquisites against the Schedule FA actually filed.
• Classify each item into serial 1 or serial 2 before computing anything. The taxed-in-India or non-resident question decides 60 percent versus Rs 1 lakh.
• Value each asset as on 31 March 2026, modelling both the open-market and the indexed-cost routes, and compute foreign bank accounts as lifetime deposits first.
• Test the aggregate against the ceiling before you promise anyone anything, and collect acquisition evidence and foreign valuer reports now, not in December.

For deeper background on why these mismatches are surfacing, see our note on how foreign assets now appear in your AIS.

For a slide-by-slide walk through the two baskets, the valuation rules and the payment clock, download the full carousel PDF.

Classifying a foreign asset into the right basket, valuing a fifteen-year-old foreign bank account, and modelling the payment clock against your funding are judgement calls with a hard December deadline attached. If you or a member of your team is weighing a FAST-DS declaration, talk to an expert before the valuation work starts, not after. Book a quick call: https://calendly.com/asbanka-info/30min. CA Adityavikram Banka, Founder, A S Banka Advisors Private Limited.