The Indian government has introduced a new tax amnesty scheme, specifically designed to encourage non-resident Indians (NRIs), students who have studied abroad, professionals working overseas, and individuals who have recently repatriated to India, to voluntarily disclose previously undeclared foreign assets and income. This initiative, officially named the Foreign Assets of Small Taxpayers-Disclosure Scheme, aims to bring these previously untaxed funds and assets into the formal tax net.
Under this scheme, which commenced on Sunday and will conclude on December 31st, small taxpayers can declare their undisclosed foreign assets and income, and in return, pay an effective tax rate of 60%. The significant advantage of this voluntary disclosure is the immunity it offers from potential penalties and prosecution that would otherwise be levied for non-compliance. The Central Board of Direct Taxes (CBDT) has set March 31, 2026, as the “valuation date” for determining the market value of the assets being declared.
The scheme outlines different thresholds for declarations. For foreign assets or income that were never previously subjected to taxation, the aggregate value must not exceed INR 1 crore. However, for foreign assets that were either declared for tax purposes previously or acquired while the taxpayer was a non-resident but were simply not reported in the tax-return schedule, a higher threshold of INR 5 crore applies. In these latter cases, a fixed fee of INR 1 lakh is also required. An official clarified that the rationale behind this flexibility is to provide an opportunity for individuals, such as former students who might have inadvertently failed to disclose details of their overseas bank accounts, to rectify their omissions without severe repercussions.
It is crucial to note that the undisclosed asset, which includes any financial interest, must be directly held in the name of the taxpayer, or the taxpayer must be its beneficial owner. The scheme explicitly excludes proceeds derived from criminal activities and cases where assessment proceedings under the Black Money Act, 2015, have already been finalized. Taxpayers who choose to avail themselves of this scheme will be granted a two-month window to pay the calculated tax after receiving the final order from the authorities.
Richa Sawhney, a tax partner at Grant Thornton Bharat, a prominent consulting firm, underscored the significance of this initiative. She highlighted that the scheme provides a unique, one-time opportunity for taxpayers with undeclared foreign income and assets, up to the specified limits, to regularize their tax position through a straightforward process. However, she also emphasized the limited timeframe for participation, noting that declarations can only be filed between August 16, 2026, and December 31, 2026, with no extensions thereafter. Therefore, taxpayers are strongly advised to promptly evaluate their eligibility and take timely action to benefit from this opportunity. This initiative represents a significant push by the government to broaden the tax base and ensure compliance with international financial regulations.
