Forgot a foreign account or ESOP in Schedule FA? The small-taxpayer foreign asset disclosure window shuts on 31 December 2026
The Foreign Assets of Small Taxpayers Disclosure Scheme 2026 closes on 31 December 2026. Rs 1 lakh fee for unreported taxed assets up to Rs 5 crore; 60% outgo on undisclosed income up to Rs 1 crore.
If you are a resident Indian who holds RSUs in a US parent company, a savings account opened during a stint abroad, or a foreign plot bought while you were an NRI, and that asset never made it into Schedule FA of your income-tax return, the Central Board of Direct Taxes has opened a one-time door. The Foreign Assets of Small Taxpayers- Disclosure Scheme Rules, 2026, notified as G.S.R. 732(E) on 14 August 2026 and in force from 16 August 2026, let eligible taxpayers regularise the omission. The window closes on 31 December 2026, which is 73 days from the date of this article (19 October 2026). Every figure below is taken from the official notification published on incometax.gov.in.
What the Section Says
The rules are made under section 143 of the Finance Act, 2026 (4 of 2026), and they operate the scheme set out in Chapter IV of that Act. Rule 2 fixes three dates and one authority that govern everything else:
| Term (Rule 2) | What it means |
|---|---|
| Valuation date | 31 March 2026 |
| Last date for declaration | 31 December 2026 |
| Income-tax authority | Pr. DGIT (Systems) or DGIT (Systems) |
| Commencement | 16 August 2026 |
Rule 4 links the amount you pay to the Table in section 133 of the Finance Act, 2026. That Table has two serial numbers, and the rules' own illustrations show how each one works:
| Track | Who it covers | Aggregate value cap | Amount payable |
|---|---|---|---|
| Sl. No. 1 | Undisclosed foreign income and/or undisclosed foreign assets | Rs 1 crore | Tax at 30% of asset value plus 30% of income, plus penalty equal to 100% of that tax |
| Sl. No. 2 | Foreign assets bought from income already taxed in India, or earned while non-resident, that were simply not reported in the return schedule | Rs 5 crore | Fee of Rs 1 lakh |
Track 1 is for money never taxed, with an effective outgo of 60% of declared value. Track 2 is a reporting lapse only, so the cost is a flat Rs 1 lakh whether the asset is worth Rs 10 lakh or Rs 4.9 crore.
Rule 5(1) requires the declaration to be filed electronically in Form 1. The procedure then runs through three more forms:
- Form 2 (Rule 6): the income-tax authority passes an order stating the amount payable, with penalty or fee.
- Form 3 (Rule 7): you pay and file an intimation of payment with proof, including any interest.
- Form 4 (Rule 8): the authority certifies the validity of the declaration and payment within one month from the end of the month in which you submit Form 3.
How assets are valued (Rule 3)
Rule 3's general principle is "higher of cost and market value on 31 March 2026", varied by asset class:
| Asset | Fair market value under Rule 3 |
|---|---|
| Quoted shares and securities | Higher of cost of acquisition and the average of the lowest and highest quoted price on an established securities market on 31 March 2026 (or the last traded date before it) |
| Bullion, jewellery, precious stones, artistic works | Higher of cost and open-market price per a recognised valuer's report; indexed cost of acquisition is deemed FMV if no valuation is done |
| Foreign bank account | Sum of all deposits from the date of opening to 31 March 2026, ignoring deposits made out of withdrawals from the same account |
| Asset transferred before 31 March 2026 (other than a bank account) | Higher of cost and sale price |
Rule 3(4) converts values in an RBI-permitted currency at the RBI reference rate on 31 March 2026. Rule 3(5) handles other currencies by first converting to US dollars at the local central bank rate on the same date. Rule 3(3) prevents double counting: if you sold one asset or withdrew from an account to buy another, the value of the old asset or account is reduced by the amount reinvested.
Worked Example
Take Ananya, a resident software engineer in Bengaluru with a gross salary of Rs 42 lakh in FY 2025-26. She returned to India in 2019 after five years in the United States. She has three foreign holdings, none of which she reported in Schedule FA:
- RSUs of her US employer, vested between 2021 and 2025. Each vest was taxed through Indian payroll as a perquisite (see Oquilia's perquisite tax calculator). Value under Rule 3(1)(c) on 31 March 2026: Rs 85 lakh.
- A US brokerage cash and ETF account funded entirely from her US salary while she was a non-resident before 2019. Value on 31 March 2026: Rs 1.15 crore.
- A small US savings account into which she deposited freelance consulting fees of Rs 6 lakh in FY 2022-23 that she never declared in India. Sum of deposits under Rule 3(1)(e): Rs 6 lakh. For simplicity she declares it as an undisclosed foreign asset valued at Rs 6 lakh; Rule 3(3) and its Illustration 2 exist precisely so that the same money is not counted twice as both income and asset.
Step 1: sort each item into a track.
| Holding | Source of funds | Track | Value counted |
|---|---|---|---|
| RSUs | Taxed in India as perquisite | Sl. No. 2 | Rs 85,00,000 |
| US brokerage | Earned while non-resident | Sl. No. 2 | Rs 1,15,00,000 |
| US savings deposits | Undisclosed Indian income | Sl. No. 1 | Rs 6,00,000 |
Step 2: test the caps. Track 2 aggregate is Rs 85 lakh + Rs 1.15 crore = Rs 2 crore, within the Rs 5 crore limit. Track 1 aggregate is Rs 6 lakh, within the Rs 1 crore limit.
Step 3: compute the amount payable.
| Component | Calculation | Amount |
|---|---|---|
| Track 2 fee | Flat | Rs 1,00,000 |
| Track 1 tax | 30% of Rs 6,00,000 asset value | Rs 1,80,000 |
| Track 1 penalty | 100% of Rs 1,80,000 | Rs 1,80,000 |
| Total | Rs 4,60,000 |
Step 4: pay on time. Suppose the Form 2 order is passed on 10 November 2026. The end of that month is 30 November 2026, so payment without interest is due by 31 January 2027 (two months later). After that, interest runs at 1% per month or part of a month for a maximum of two further months, to 31 March 2027. Paying on 15 February 2027 adds 1% of Rs 4.6 lakh, or Rs 4,600. Paying on 1 April 2027 forfeits the scheme benefit entirely.
Once Ananya receives Form 4, she should also make sure every future ITR carries all three holdings in Schedule FA,. If she later sells the RSUs, the gain is computed normally; Oquilia's capital gains calculator handles the holding-period split, and the income tax calculator shows the overall liability for the year.
Common Mistakes
1. Using the closing balance for a bank account. Rule 3(1)(e) values a foreign bank account as the sum of all deposits since opening, not its balance on 31 March 2026. In the rules' Illustration 1, an account opened in 2010 with $6,000 of deposits is valued at $4,900, whatever its closing balance. Underestimating this figure can tip an otherwise eligible Track 1 case over Rs 1 crore once the authority recomputes it.
2. Forgetting the redeposit proviso. The flip side: the proviso to Rule 3(1)(e) excludes deposits made from withdrawals out of the same account. In Illustration 1, three redeposits totalling $1,100 of previously withdrawn money are excluded. Counting them inflates both the value and, on Track 1, the 30% tax.
3. Mixing up the two tracks. RSUs taxed through Indian payroll belong to Sl. No. 2 (Rs 1 lakh fee), not Sl. No. 1 (60% outgo). Misfiling a Rs 85 lakh RSU holding under Track 1 would cost Rs 51 lakh (Rs 25.5 lakh tax plus Rs 25.5 lakh penalty) instead of Rs 1 lakh. Keep payslips and Form 16 showing the perquisite was taxed.
4. Splitting assets to dodge the cap. The caps apply to the aggregate value. Illustration 3 in Rule 4 shows a resident with a Rs 2.5 crore foreign mutual fund and Rs 4 crore of NYSE shares; the Rs 6.5 crore total exceeds Rs 5 crore, so the taxpayer is ineligible for the scheme entirely. You cannot declare just one asset and leave the other out.
5. Relying on the 20% variance cushion for bank accounts. Rule 5(2) protects a declaration from being voided where the declared FMV differs from the officer's value by up to 20%. That protection applies to any asset "other than a bank account". A bank account figure must be exact.
6. Converting at the wrong exchange rate. Rules 3(4) and 3(5) require the RBI reference rate on 31 March 2026, not the rate on the date of purchase or vesting, and not your bank's card rate.
7. Missing the four-month payment ceiling. The clock starts at the end of the month in which the Form 2 order is passed. Two months are interest-free; two more carry 1% per month. On the third month, the declaration lapses, as the Rule 7 illustration makes clear for any payment after 31 January 2027 on a September 2026 order.
FAQ
What is the last date to file under the Foreign Assets of Small Taxpayers Disclosure Scheme 2026?
The last date is 31 December 2026 under Rule 2(4). The declaration must be filed electronically in Form 1. Assets are valued as on 31 March 2026.
I only forgot to report RSUs in Schedule FA. How much will I pay?
If the RSUs were taxed in India as a perquisite and the total value of all such unreported assets is Rs 5 crore or less, you fall under Sl. No. 2 of the Table in section 133 of the Finance Act, 2026. The amount payable is a fee of Rs 1 lakh, as shown in Illustration 2 of Rule 4.
How is undisclosed foreign income taxed under the scheme?
Under Sl. No. 1, tax is 30% of the undisclosed asset value and 30% of the undisclosed income, plus a penalty equal to 100% of that tax. Illustration 1 of Rule 4 shows a Rs 60 lakh account and Rs 20 lakh of income producing Rs 24 lakh of tax and Rs 24 lakh of penalty, a total of Rs 48 lakh.
What if my foreign assets are worth more than Rs 5 crore?
The scheme is not available. Illustration 3 of Rule 4 rules out a taxpayer whose foreign mutual fund (Rs 2.5 crore) and NYSE shares (Rs 4 crore) together total Rs 6.5 crore. Such holdings sit outside this scheme and within the ambit of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, the text of which is on India Code.
How is a foreign bank account valued?
Under Rule 3(1)(e), it is the sum of all deposits from opening to 31 March 2026, ignoring deposits made out of withdrawals from the same account. If the account was already declared and taxed under Chapter VI of the 2015 Black Money Act, only deposits since that declaration count, as Illustration 2 shows ($3,100 instead of $4,900).
Is interest charged if I pay late?
Payment within two months from the end of the month of the Form 2 order carries no interest. For up to two further months, interest is 1% per month or part thereof. After four months in total, the scheme benefit is lost, per the Rule 7 illustration.
This article summarises G.S.R. 732(E) dated 14 August 2026 and is general information, not tax advice. The source of funds for each asset decides which track applies; for the year's filing dates see the assessment year glossary.