Overview
- The Central Board of Direct Taxes notified the Foreign Assets of Small Taxpayers Disclosure Scheme Rules on August 14, 2026, and the rules take effect on August 16, 2026.
- The scheme creates two routes: declarations up to ₹1 crore require an effective 60% payout (30% tax plus a matching penalty) and a second conditional route for specified cases up to ₹5 crore carries a flat fee of nil or ₹1 lakh.
- Fair market value is fixed as of March 31, 2026, declarations must be filed electronically in Form 1 by December 31, 2026, and once authorities issue Form 2 declarants get two months to pay with an optional extra two months at 1% monthly interest.
- Rules set detailed valuation methods, including valuing foreign bank accounts as the sum of all deposits since account opening and converting currencies using the RBI reference rate, and they allow a 20% variance so modest valuation gaps do not void a declaration.
- The scheme is narrowly limited, not a blanket amnesty: eligible cases include assets bought while non-resident or from income already taxed in India, successful declarants receive statutory immunity, and failed or unpaid declarations revert to normal enforcement which can include tax, penalty and prosecution.