FAST-DS 2026: Forgot to report a dormant foreign bank account? Here’s how the new disclosure window works

For Indians who returned home after working or studying abroad, an old overseas bank account can be easy to overlook. But once a person becomes a resident of India, certain foreign assets have to be reported in the income tax return. The government has now opened a one-time window for eligible taxpayers to disclose such assets and seek immunity from penalties and prosecution under the Black Money Act.

The Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS), 2026 came into effect on 16 August and allows eligible taxpayers to make declarations until 31 December 2026. The scheme covers specified undisclosed foreign assets and income, as well as some foreign assets that were acquired legitimately but were not reported in the relevant tax-return schedule.

The opportunity is particularly relevant for people who retain overseas bank accounts, investments or other assets after returning to India. The Income Tax Department has also made foreign asset information received through international reporting arrangements available in the Annual Information Statement, making it easier for taxpayers to identify information that may need attention.

A foreign bank account may have been opened years ago to receive salary, scholarship payments or meet expenses while living overseas. If it remained open after the taxpayer returned to India, its reporting requirement needs to be examined based on the person's residential status and the nature and source of the funds.

Foreign assets are generally reported through Schedule FA in the applicable income tax return. The reporting obligation is distinct from whether the account earned interest or had transactions during the relevant year. The Income Tax Department's guidance on Schedule FA specifically highlights the need for taxpayers with foreign assets to use the appropriate return forms.

The Black Money Act can impose a ₹ 10 lakh penalty for failure to furnish details of a foreign asset or for furnishing inaccurate particulars, subject to statutory exceptions and thresholds. This makes an apparently insignificant old account worth reviewing rather than ignoring.

FAST-DS, however, does not treat every unreported foreign asset in the same way.

The first covers an undisclosed foreign asset or undisclosed foreign income that was not offered to tax. The aggregate value of the qualifying asset and income cannot exceed ₹ 1 crore. For such declarations, the taxpayer has to pay tax at 30% along with an additional amount equal to 100% of that tax. In effect, the combined payment works out to 60% of the amount covered by this category.

The second category is more relevant to a common situation involving returning Indians. It covers a foreign asset that was acquired from income that had already been offered to tax, or an asset acquired when the taxpayer was a non-resident but which was not reported after the person became resident in India. Here, the aggregate value of the qualifying foreign assets can be up to ₹ 5 crore and the prescribed payment is a flat ₹ 1 lakh fee.

This distinction matters. A taxpayer should not automatically assume that an omitted foreign bank account attracts the 60% payment.